UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 -------------------------

FORM 10-KSB

(Mark One)

|[X] | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE FISCAL YEAR ENDED:  January 31, 2002
|--- | ---------------------------------------------------------------------------------------------------------------------------------

OR

|[   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------

Commission file number: 000-29097

CANTRONICS CORPORATION
  (Exact name of small business issuer in its charter)

|Nevada                                           | 86-0930437                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|63A Clipper Street                               | V3K 6X2                             
|Coquitlam, British Columbia                      | (Zip Code)                          
|(Address of principal executive offices)         |                                     

Issuer's telephone number: (604) 516-6667

|Securities Registered Under Section 12(b) of the Exchange Act: | None            
|-------------------------------------------------------------- | ----------------
|                                                               |                 
|Securities Registered Under Section 12(g) of the Exchange Act: | Common Shares   
|                                                               | $0.001 par value
|                                                               | (Title of class)

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

Check
  if there is no disclosure of delinquent filers in response to Item 405 of Regulation
  S-K is not 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.

Revenue for the most recent fiscal year: $3,138.066.

Aggregate market
  value of voting stock held by non-affiliates of the Registrant, as of May 31,
  2001: $2,435,825

Number of shares outstanding of each of the Registrant's classes of common equity, as of January 31, 2002: 63,243,600 Common Shares

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Documents
  Incorporated by Reference: Registrant's Registration Statement on Form 10-KSB
  and all exhibits thereto as filed with the Securities Exchange Commission on
  January 24, 2000, July 5, 2001 and all amendments thereto are incorporated by
  reference into Part III of this Annual Report.

Registrant's
  Report on Form 8-K as filed on March 23, 2000, March 26, 2001, April 2, 2001,
  April 20, 2001, April 30, 2001, May 1, 2001, June 6, 2001, August 13, 2001,
  August 14, 2001 and October 9, 2001 and all amendments thereto are incorporated
  into Part III of this Annual Report.

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TABLE OF CONTENTS

|PART I   |                                                            | 4  | 
|-------- | ---------------------------------------------------------- | -- | 
|ITEM 1.  | DESCRIPTION OF BUSINESS                                    | 4  | 
|ITEM 2.  | PROPERTIES.                                                | 16 | 
|ITEM 3.  | LEGAL PROCEEDINGS.                                         | 16 | 
|ITEM 4.  | SUBMISSION OR MATTERS TO A VOTE OF SECURITY HOLDERS.       | 16 | 
|         |                                                            |    | 
|PART II  |                                                            | 16 | 
|ITEM 5.  | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.  | 16 | 
|ITEM 6.  | MANAGEMENT'S DISCUSSION AND ANALYSIS                       | 17 | 
|ITEM 7.  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.               | 20 | 
|ITEM 8.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON           |    | 
|         | ACCOUNTING AND FINANCIAL DISCLOSURES.                      | 20 | 
|         |                                                            |    | 
|PART III |                                                            | 20 | 
|ITEM 9.  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL       |    | 
|         | PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 20 | 
|ITEM 10. | EXECUTIVE COMPENSATION.                                    | 23 | 
|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND        |    | 
|         | MANAGEMENT                                                 | 24 | 
|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.            | 25 | 
|ITEM 13. | EXHIBITS AND REPORTS ON FORM 8-K                           | 26 | 

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PART I

Enforcement of Legal Remedies

Certain
  officers and directors of Cantronics Corporation (the "Company") and other persons
  involved with the Company as professional advisors are resident in Canada. As
  a result, it may be difficult to effect service within the United States upon
  such persons or to realize on any judgment by any court of the United States
  which is predicted on civil liabilities under the Securities Act of 1933, as
  amended (the "1933 Act"), or the Securities Exchange Act of 1934, as amended
  (the "1934 Act"). There is doubt as to the enforceability in Canada, either
  in original actions or through enforcement of United States judgments, of liabilities
  predicated solely upon violation of the 1933 Act or the 1934 Act, or the rules
  and regulations promulgated thereunder.

Note Regarding Forward-Looking Statements

Except
  for statements of historical fact, certain information contained herein constitutes
  forward-looking statements, including, without limitation, statements
  that express or involve discussions with respect to predictions, expectations,
  beliefs, plans, projections, objectives, assumptions or future events or performance
  (often, but not always, using words or phrases such as expects or
  does not expect, is expected, anticipates
  or does not anticipate, plans, estimates
  or intends, or stating that certain actions, events or results may,
  could, would, might or will
  be taken, occur or be achieved) are not statements of historical fact and may
  be forward-looking statements. Such forward-looking statements involve
  known and unknown risks, uncertainties and other factors which may cause the
  actual results or achievements of the Company to be materially different from
  any future results or achievements of the Company expressed or implied by such
  forward-looking statements. Such factors include, among others, the following:
  the Companys limited operating history, competition, the telecommunications
  regulatory environment, dependency upon facility based carriers, dependency
  on the integrity of call records, minimum volume commitments, dependency on
  effective information systems, dependency on key personnel and other risks associated
  with the telecommunications industry. See Description of Business - Risk
  Factors. Such statements are included, among other places, in this document
  under the headings Description of Business, Description of
  Properties and Managements Discussion and Analysis of Financial
  Condition and Results of Operations.

ITEM 1.     DESCRIPTION OF BUSINESS.

HISTORY OF
  THE COMPANY

Cantronics
  Corporation (the Company or Registrant) distributes
  and manufactures electro-optics and condition monitoring equipment. The Company
  was incorporated under the Nevada Corporation Code on February 25, 1998, under
  the name Solo & Hurst, Inc.

The
  Company was inactive (had Nil assets) from incorporation to December 18, 2000
  when Solo & Hurst, Inc. acquired 100% of the issued and outstanding shares
  of Cantronic Systems Inc., a corporation duly organized on February 28, 1997
  under the laws of the Province of British Columbia, Canada. In the share exchange
  transaction, stockholders of Solo & Hurst, Inc. who controlled 98% of its
  issued and outstanding stock transferred their 98% interest to the stockholder
  and affiliates of Cantronic Systems Inc. In exchange, the stockholder of Cantronic
  Systems Inc. transferred her 100% interest in Cantronic Systems Inc. to Solo
  & Hurst, Inc. Solo & Hurst issued no new shares in connection with this
  acquisition. The transaction was recorded using accounting principles applicable
  for a reverse acquisition whereby Cantronic Systems Inc. was treated as being
  recapitalized since immediately after the share exchange, the former stockholder
  of Cantronic Systems Inc. and its affiliates controlled 98% of the common stock
  of the Company. Following the accounting for reverse acquisitions, the financial
  statements subsequent to closing of the share exchange agreement are presented
  as a continuation of Cantronic Systems Inc. Accordingly, the operations of Solo
  & Hurst, Inc. are consolidated with those of Cantronic Systems Inc. since
  the date of acquisition. Financial information contained in this annual report
  is presented as a continuation of Cantronic Systems Inc. Following the transaction,
  the Company changed its name to Cantronics Corporation and effected a 20 for
  1 forward split of its common stock par value $0.001.

Immediately
  prior to the acquisition, the Company had 60,000,000 shares of common stock
  outstanding (after taking into account the 20 for 1 forward split). As part
  of the acquisition, and in exchange for all of the outstanding

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common stock of Cantronic Systems, Inc., the Company issued
  59,000,000 shares of common stock (after taking into account the 20 for 1 split)
  to the shareholders and affiliates of Cantronic Systems, Inc.

Solo
  & Hurst, Inc. filed a registration statement with the Securities and Exchange
  Commission on January 24, 2000. The Company's common shares have never traded
  on any stock exchange or quotation system.

On
  February 2, 2001, the Company acquired 100% of the issued and outstanding share
  capital of Condition Monitoring Training Institute Inc. ("CMTI"), a company
  incorporated pursuant to the laws of the Province of British Columbia, and it's
  wholly-owned US subsidiary Academy of Infrared Thermography, Inc. ("AIRT") in
  a share exchange transaction. As a result of the transaction, the Company issued
  2,750,000 common shares to the shareholders of CMTI. Cantronic Systems Inc.,
  CMTI and AIRT are the operating entities for the Company's electro-optics and
  condition monitoring equipment distribution, manufacturing, and training business.

BUSINESS OF
  THE COMPANY

The
  Company, through its wholly-owned subsidiaries, Cantronic Systems Inc., CMTI
  and AIRT, manufactures, distributes, and provides training on electro-optics
  and condition monitoring equipment for industrial facilities.

The
  Company offers integrated solutions in the field of condition monitoring and
  predictive maintenance and infrared imaging. It is the Company's goal to create
  greater efficiencies with products and services and business practices that
  are already proven on a smaller scale. The Company sells its condition monitoring
  systems to businesses in all major standard industrial classifications, including
  aerospace, food processing, chemicals, mining, utilities, forest products, steel,
  tire, glass and electronics.

The
  Company's thermal imaging systems use advanced sensing and image processing
  infrared technologies that detect infrared radiation, or heat, that enables
  the operator to measure minute temperature differences and to see objects in
  daylight or total darkness and through smoke, haze and most types of fog. The
  Company's products can also incorporate image analysis software. The Company's
  thermal imaging systems are also used for a broad range of applications including
  condition monitoring of industrial equipment, research and development, manufacturing
  processes, night vision, firefighting and medical imaging.

The
  Company markets its condition monitoring systems primarily through direct salespeople,
  and a number of distributors and consultants located throughout the United States,
  Canada, Europe, the Middle East, Latin America, and Asia. The Company is developing
  an interactive and intuitive Web site to market and support its products worldwide.

Condition Monitoring Equipment Systems
            Overview

Rotating
  machinery that is used in industry can be very costly to repair if an unexpected
  breakdown occurs. Condition monitoring equipment systems carry out real-time
  condition monitoring of equipment and receive instant warning of machinery that
  needs repair. The Company's online monitoring systems perform advanced functions
  that effectively monitor machinery thereby reducing the cost of repairs, downtime
  and rejected product or lost services.

An
  online monitoring system for machines provides the data resolution necessary
  to identify the fundamental causes of problems. The minimum information for
  machinery parameters includes vibration information, machinery parameters (bearing
  temperatures, seal leakage, etc.) and process information. Systems that rely
  on vibration amplitude alone may be able to protect the plant, its personnel
  and the environment by saving the machine from serious mechanical problems.

The
  Industry

Turbines,
  compressors and other types of large, rotating machinery designed to operate
  continuously for many years are used extensively in the petrochemical and power
  generation industries. if the machinery breaks down it can be expensive to the
  user, both in terms of lost production and repair cost. Monitoring rotating
  machinery requires rapid collection, management and analysis of vast amounts
  of data. Once this data is available, it can be used to monitor the performance
  and efficiency of the machinery. Machinery monitoring systems can be developed
  to adjust operating parameters of the equipment to maximize output and minimize
  fuel cost.

Continuous
  monitoring of machine processes is one of the most efficient methods used to
  assess the condition of machinery. Vibration condition monitoring is found in
  heavy industrial markets such as petrochemical,

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pulp and paper, and power generation. However, the high saturation
  of these end-user markets has led equipment vendors to seek out and develop
  niche markets for growth.

Machinery
  monitoring systems utilize high-speed digital signal processing technology and
  sophisticated monitoring software to continuously monitor vibration, temperature,
  pressure and flows in this type of machinery. The current operating characteristics
  of the machine can be compared to when the machine was new. This comparison
  can be used to monitor wear in bearings, blades, and other parts, and to predict
  failures. The analysis can be conducted automatically without the presence of
  a skilled engineer at the equipment site. Predictions can be used to schedule
  maintenance before breakdowns occur.

According
  to strategic research conducted by Frost & Sullivan, revenues from the sale
  of vibration condition monitoring equipment in the United States market reached
  $259 million in 1998. However, the revenue growth rate significantly decreased
  in 1998 due to repercussions from the Asian economic crisis. Growth is expected
  to remain depressed in the United States until Asia recovers. Frost & Sullivan
  estimate that the emerging Asian economies combined with the existing markets
  in North America and Europe create a worldwide market for condition monitoring
  equipment estimated to be 1.6 to 2 billion dollars per year.

A
  growing number of European Union directives and national regulations that set
  limits on environmental and industrial noise and vibration are expected to drive
  significant demand for monitoring systems. This legislation will result in corporations
  being required to perform noise or vibration tests.

It
  is important to monitor the condition of the installed plant so as to effectively
  maintain and preserve the assets for as long as possible. The aims of condition
  monitoring equipment can be summarized as follows:

|- | reduce or eliminate unplanned failures of rotating equipment;                                      
|- | ---------------------------------------------------------------------------------------------------
|- | maximize the serviceable life of machinery and thus reduce
      maintenance and replacement costs;
|- | efficiently plan the use of maintenance resources during
      machinery overhauls;                
|- | reduce the stores of inventory of spare parts that were used
      for unnecessary replacement; and
|- | reduce inventory insurance premiums.                                                               

The
  scope for application condition monitoring techniques is vast and may involve
  the acquisition of any identifiable value, measured, inferred or derived, for
  comparison with past records or established criteria. The main groups of existing
  techniques are, physical inspection, wear product and contamination analysis,
  process performance measurement, thermodynamic performance monitoring and vibration
  monitoring.

Operations

The
  Company's condition monitoring equipment systems products are distributed and
  manufactured by its wholly owned subsidiary Cantronic Systems Inc. In the financial
  period ended January 31, 2002 and 2001, no research and development expenses
  were incurred on the development of condition monitoring equipment.

Online
  Vibration Monitoring System Products

The
  Company has extensive experience in providing portable and on line vibration
  and predictive maintenance monitoring systems to industrial customers. The Company
  has designed the Machine Log 4000 Series ("ML4000") as a field instrument to
  meet all aspects of vibration monitoring of rotating equipment, from startup/coast-down
  to on-line surveillance of vibration. The system provides high-level analysis
  capabilities for vibration specialists including shaft rotor dynamics analysis
  with phase synchronized vibration data for every measurement channel. It also
  features an optional fault analysis expert system for automated fault diagnosis.
  The ML4000 monitoring system performs real-time condition monitoring of equipment
  and provides instant warning of machinery that needs repair. The ML4000 predicts
  pending problems and plans preventative maintenance schedules.

ML4000
  Series

The
  ML4000 series is configured into three components  ML4100, ML4200 and
  ML4300. All three configurations are available in 16 channels, one signal processing
  module and expandable to 128 channels with additional signal processing modules.
  These three components can be connected via industrial standard local area network
  to form a distributed system to cover a large area of the industrial plant and
  several operating units. The ML4000 provides the following advantages to users:

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|- | prevents down-time;                                   
|- | ------------------------------------------------------
|- | reduces maintenance costs;                            
|- | predicts and prevents breakdowns;                     
|- | extends the life of machinery; and                    
|- | prevents damaged equipment from deteriorating further.

The
  ML4000 system features a modular design structure which can be expanded to meet
  customer requirements; from small monitoring applications to enterprise-wide
  multiple facility networked monitoring.

The
  ML4000 systems use multiple digital based signal processing modules to input
  signals in parallel which allows synchronized real time data processing of all
  input channels. The Company's proprietary design also allows effective handling
  of transient and steady state signals on the same unit. The ML4000 synchronizes
  multi-bearing analysis and display in real time, which allows accurate analysis
  and correlation between machine shafts and trains.

ML4100

The
  ML4100 is a 19 inch rack-mounted standard industrial personal computer unit
  with a non-integrated monitor and maximum input of 128 dynamic channels. The
  ML4100 is a permanently installed unit suitable for round the clock on-line
  dynamic condition monitoring.

ML4200

The
  ML4200 is a 19 inch rack-mounted integrated industrial personal computer unit
  with an integrated monitor and a maximum input of 32 dynamic channels. The ML4200
  is a permanently installed unit suitable for round the clock on-line dynamic
  condition monitoring.

ML4300

The
  ML4300 is a portable system used for trouble shooting/testing and startup/coast-down
  analysis. The ML4300 has a maximum input of 32 channels, LCD display and a port
  for an optional external VGA monitor, a printer and mouse port. The ML4300 is
  suitable for trouble shooting, testing and in field diagnosis for machines with
  no continuous monitoring system.

Competition

The
  Company estimates that fewer than 20 companies participate in the United States
  vibration condition monitoring market. Most of these companies manufacture products
  for protection systems, predictive systems and portable systems, although few
  have significant market share.

There
  are a number of competitors marketing similar products to the ones manufactured
  and distributed by the Company. The North American market is dominated by a
  small number of large companies. Mergers and acquisitions have and continue
  to compress the amount of companies operating in this field in North America.
  Management of the Company believes that the opportunity for growth and expansion
  of the Company lies in the Asian markets and to a lesser extent the European
  market where consolidation of manufacturers and distributors has not occurred
  to the extent that it has in North America.

The
  Company has developed a customer service niche in the industry with which larger
  more rigid competitors may have difficulty competing. The Company's size allows
  it to adapt and modify its products to the customers' specific needs. Additionally
  the Company's efficient operations and corporate diversity allows it to sell
  its products which are equal to or superior to the competitor's products at
  a better price.

The
  Company faces competition for its products from competitors of varying sizes
  and manufacturing and financial capabilities. The Company has identified two
  other corporations which are engaged in the manufacture and production of online
  vibration monitoring systems products.

Bently
  Nevada is a privately owned corporation based in Minden, Nevada, USA. It employs
  more than 1700 employees in over 80 sales and service offices in the principal
  industrial centers of 40 countries. It's primary business is to help customers
  protect and manage their rotating and reciprocating machinery. Bently Nevada

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provides products, training, and engineering services via
  a factory-trained, direct sales and service force, and vertically integrated
  engineering and manufacturing operations located on three continents.

Bently
  Nevada targets two primary industries: the hydrocarbon processing industries
  and the power generation industries. However, its products are also used in
  the mining, pulp and paper, food, pharmaceutical, water treatment, manufacturing,
  marine, and metals industries.

Computational
  Systems Inc., based in Knoxville, Tennessee, is a wholly-owned subsidiary of
  Emerson Electric Company, a publiccorporation based in St. Louis, Missouri.
  Computational Systems Inc. employs over 400 employees working in advanced maintenance
  systems. with offices and affiliates throughout the United States and around
  the world. It offers maintenance management consulting and training, technology
  training, contract predictive maintenance services, tribology lab services,
  and advanced engineering and diagnostic capabilities through its services division.

Marketing
  and Sales Strategy

The
  Company manufactures and distributes equipment for industrial production facilities
  that use rotating machinery and electrical equipment in their process, such
  as utilities, petroleum and petrochemical plants, chemical production facilities,
  pulp and paper mills, sawmills, shipyards, etc. The products also have applications
  in the aerospace, medical and research industries.

The
  Company intends to focus its expansion efforts predominately on the Asian and
  European markets while continuing to develop its North American sales through
  it's wholly owned subsidiary, Cantronic Systems Inc.

Independent
  Agents

The
  Company distributes its condition monitoring equipment products through outside
  distributors and sales consultants in Taiwan, South Korea, Spain, Egypt, China,
  Australia, the United States and Singapore.

Infrared
  Imaging Cameras and Infrared Night Vision Systems

Overview

Infrared
  radiation is light that is not visible because its wavelength is too long to
  be detected by the human eye. Unlike visible light, infrared radiation is emitted
  directly by all objects and materials. Thermal imaging systems are used to detect
  infrared radiation and convert it into an electronic signal, which is then processed
  and formatted into a video signal and displayed on a monitor. These systems
  are distinguished from one another by their capability to detect and resolve
  infrared radiation, the clarity of the image displayed, detection range, system
  reliability, price and adaptability to a variety of customer requirements. Thermal
  imaging systems, unlike night vision goggles, enable the operator to see objects
  in total darkness and through obscurants such as smoke, haze and most types
  of fog. Advanced thermal imaging systems can also detect and measure minute
  temperature differences.

Early
  applications of thermal imaging technology primarily involved the use of expensive
  high-resolution systems in military combat applications such as weapons targeting,
  where performance factors were more important than price. A simpler form of
  the technology was also employed in limited commercial applications such as
  detecting heat loss from buildings or houses, where price was more important
  than sophisticated performance. Consequently, a large group of potential users
  in both the commercial and government markets did not use thermal imaging technology
  since available systems either failed to meet performance requirements or were
  too expensive.

An
  infrared detector, which absorbs infrared radiation and converts it into an
  electronic signal, is a primary component of thermal imaging systems. Until
  recently, thermal-imaging systems relied on infrared detectors, which needed
  to be cooled to near absolute zero in order to operate. This technology is sometimes
  referred to as "cooled" detector technology. The cryogenic "coolers" needed
  for such detectors are expensive components that consume a great amount of power
  and add to the weight, size and overall complexity of the system.

Thermal
  imaging systems that use new "uncooled" detector technology do not require these
  cooling components but instead operate at room temperature. This feature allows
  for cheaper, smaller, lighter, more energy efficient, solid-state systems. These
  factors are expected to increase the demand for such systems in existing market
  segments and create demand in new market segments, such as fire fighting and
  machine vision.

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Business
  Strategy

To
  January 31, 2002, there were minimal sales recognized from this product line.
  The Company penetrated the commercial market by developing customized products
  with increased flexibility and features, in addition to software analysis tools.
  The Company's handheld commercial thermal imaging systems incorporate a thermal
  imaging detector housed in a compact self-contained unit, a liquid crystal display,
  video display or viewfinder, an embedded processor and various image analysis
  software packages. A liquid crystal display like that of a home video camera
  is a standard feature in most models. The thermal image can also be displayed
  on an independent video display. The systems also include a personal computer-based
  processor that allows accurate measurement of minute temperature differences
  and extensive real-time analysis and post-processing of the acquired image.

Operations

The
  Company's infrared imaging cameras and infrared night vision systems products
  will also be distributed and manufactured by its wholly owned subsidiary Cantronic
  Systems Inc. In the financial period ended January 31, 2002 and January 31,
  2001, the company spent $107,717. and $70,197. respectively on research and
  development. To offset research and development expenditures incurred on this
  product and expenditures on condition monitoring equipment (pg 6), the Company
  received government grants of $5,046. and $13,882. for the years ended January
  31, 2002 and 2001, respectively.

Infrared
  Imaging Cameras and Infrared Night Vision Systems Products

IR805
  Uncooled Thermography Camera

The
  Model IR805 camera is a precision, portable, uncooled infrared imaging radiometer
  using an advanced thermoelectric sensor. The thermoelectric sensor is inherently
  radiometric and exhibits extensive dynamic range. The IR805 accurately measures
  temperature which makes the product useful for applications such as predictive
  and preventive maintenance, quality control and new product development.

IR820
  Uncooled Thermography Camera

The
  Model IR820 camera is a compact, uncooled industrial infrared thermography system
  which uses full screen voice recording. The large capacity PC memory card records
  rapidly and reliably. Automatic alarms for temperature exceeding set points
  and automatic search function of image at maximum temperature provides fast
  and accurate processing of images.

IR860
  Infrared Imaging Camera

The
  Model IR860 infrared imaging camera is a real-time, portable radiometric-imaging
  camera using an advanced uncooled infrared FPA sensor.

IA113/IA116
  Imaging Analysis Series

The Model IA113/IA116 is a very high sensitivity infrared
  imaging system, which can be developed for custom applications.

Competition

The
  Company operates in a highly competitive industry and competes with competitors
  with substantially greater resources and significantly greater market share
  than the Company. The Company expects that competition will continue to intensify
  in the future due to the increase in the size, resources and number of market
  participants. In each of its markets, the Company will face competition from
  larger, better capitalized competitors with greater resources.

The
  speed with which companies can identify new applications for existing products,
  develop products to meet those needs and supply commercial quantities at low
  prices to the market are important competitive factors. Additionally, the Company's
  products compete indirectly with numerous other products such as image intensifiers
  and low-light cameras for limited military and governmental funds.

There
  are a number of competitors marketing similar products to the ones manufactured
  and distributed by the Company. The North American market is dominated by a
  small number of large companies. Mergers and acquisitions have and continue
  to compress the amount of companies operating in this field in North America.
  Management of the Company believes that the opportunity for growth and expansion
  of the Company lies in the

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Asian markets and to a lesser extent the European market where
  consolidation of manufacturers and distributors has not occurred to the extend
  that it has in North America.

The
  Company faces competition for its products from competitors of varying sizes
  and manufacturing and financial capabilities. The Company has identified one
  other company, FLIR Systems, Inc. which is engaged in the manufacture of thermal
  imaging.

FLIR
  Systems, Inc. is a prominent corporation involved in the design, manufacture
  and marketing of thermal imaging and broadcast camera systems for a wide variety
  of commercial and government applications including condition monitoring, research
  and development, manufacturing process control, airborne observation and broadcast,
  search and rescue, drug interdiction, surveillance and reconnaissance, navigation
  safety, border and maritime patrol, environmental monitoring and ground- based
  security.

Marketing
  and Sales Strategy

The
  Company's infrared imaging cameras and infrared night vision products provide
  state-of-the-art imaging technology. The product configurations and image analysis
  software tools increase the ability of the Company to provide products tailored
  to meet individual customer requirements. The Company has also developed and
  is continuing to market innovative new products utilizing advanced "uncooled"
  thermal imaging technology in addition to the Company's continuing line of products
  that incorporate "cooled" detector technology.

The
  commercial market is comprised of a broad range of thermal imaging applications.
  This market has evolved from the use of simple heat sensing devices to sophisticated
  temperature measuring instruments that use a variety of accessories and extensive
  image analysis software. The commercial market has expanded due to the increasing
  emphasis on improving manufacturing efficiency and product quality, underscored
  by the growing importance of quality assurance programs such as International
  Standards Organization (ISO) 9000 and the increasing complexity of manufacturing
  processes. Uncooled thermal imaging technology has created opportunities to
  further penetrate existing market segments as well as to create demand in new
  markets that can benefit from the enhanced price and performance of such technology.
  The growth of the commercial market has also been driven by improvements in
  hardware functionality, enhanced image analysis software performance and declining
  hardware prices.

The
  commercial market primarily consists of the following market segments:

Condition
  Monitoring

Thermal
  imaging systems are used for monitoring the condition of equipment. Such monitoring
  allows for the detection of equipment faults so they can be repaired. This increases
  the equipment's productivity and avoids failures or major equipment damage,
  which in turn significantly reduces operating expenses by lowering repair costs
  and reducing downtime. Improved functionality of image analysis software, longer
  battery operation and simplicity of system operation are critical factors for
  this market segment. Specific condition monitoring applications include locating
  and repairing defective power transmission components or electrical connections,
  predicting the end of life of bearings in rotating machinery, evaluating the
  integrity or amount of insulation in a building or container and locating roof
  leaks and related damage.

Research
  and Development

Thermal
  imaging is a useful tool in a wide variety of research and development applications
  because of its non-destructive analysis capability. Thermal imaging can be effectively
  used in the research and design of components or products as many component
  and product designs involve the use or control of heat. . For example, thermal
  imaging is used in laser design to determine the power distribution of the beam,
  in the development of diesel engines using ceramic-coated pistons to determine
  proper adhesion of the ceramic to the metal piston and in the design of rubber
  tires to evaluate uniform heat distribution. Research and development applications
  typically require very high performance systems with extensive software capabilities
  and tools to analyze the thermal image.

Manufacturing
  Process

The
  ability to determine whether a manufacturing control process will produce acceptable
  results at the earliest point in the production cycle is critical to quality
  assurance and cost reduction. Thermal imaging and image analysis allow for the
  monitoring and control of heat, which is used in virtually all industrial processes.
  Similarly, thermal-imaging systems can identify moisture and contaminants and
  help identify the thickness of material as well as the integrity of the bonding
  of composite materials. Thermal imaging applications for manufacturing process

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control are varied and extensive, including monitoring the
  quality of metal, plastic and glass cast parts, which are highly dependent upon
  the temperature distribution in the mould, monitoring the quality of paper,
  which is dependent upon proper and even moisture distribution during the drying
  process, and monitoring the quality of products such as rubber gloves, which
  can be thermally examined to locate abnormally warm or cool spots, indicating
  non-uniform thickness that may result in a quality defect.

Airborne
  Observation and Broadcast

The
  use of airborne observation and broadcast systems is becoming a standard tool
  for television stations and broadcast networks. This technology is also used
  by law enforcement agencies around the world for surveillance, suspect search
  and apprehension and officer support. This market segment typically requires
  either very high performance daylight cameras or dual imaging systems with both
  visible light and thermal imaging capabilities, in addition to state-of-the-art
  stabilization, the ability to provide jitter-free images from great distances,
  and the ability to downlink the information from the aircraft to the production
  studio or command center on a real-time basis. Applications should increase
  as system size and weight continue to decline, enabling the use of systems on
  small and weight-restricted helicopters. In addition, law enforcement agencies
  have established thermal imaging as a primary support tool and should continue
  to take advantage of favorable prices.

New
  Commercial Market

New
  market segments for thermal imaging are opportunities developing due to the
  availability, cost effectiveness and enhanced performance characteristics of
  uncooled thermal imaging technology. Machine vision and fire fighting are near-term
  market opportunities, while landing guidance; maritime navigation, security
  and handheld law enforcement support represent future growth opportunities.
  Machine vision is a manufacturing process control that allows for real-time,
  fully automated regulation and guidance of the assembly or manufacturing process.
  As system prices decline, uncooled thermal imaging technology will provide cost
  effective solutions for a wide variety of new commercial applications.

Government
  Market

The
  government market is also comprised of a broad range of thermal imaging applications.
  Although the majority of government applications require the use of cooled technology,
  uncooled thermal imaging systems can be used for ground-based security, handheld
  observation and mine detection applications. Customers in the government market
  demand competitively priced systems that can be mounted on a variety of helicopters,
  airplanes and ships, operate in different climatic conditions and perform a
  variety of tasks requiring high image resolution quality and substantial image
  stabilization.

The
  market for Infrared Imaging Cameras continues to show strong growth. Vision
  Systems estimates that industry revenues for North American suppliers in 1999
  totaled $2.11 billion, compared with $1.86 billion in 1998. The numbers reflect
  worldwide sales and value-added original equipment manufacturer components.
  The market for Infrared Imaging Equipment is greater in Europe due to less restrictive
  government policy with respect to the technology. Vision Systems estimates the
  worldwide market for Infrared Imaging equipment to be between 8 to 10 billion
  dollars annually.

Independent Agents

The
  Company intends to distribute its infrared imaging cameras and infrared night
  vision systems through outside distributors and sales consultants in Taiwan,
  South Korea, Spain, Egypt, China, Australia, the United States and Singapore.

Business Strategy

Management
  of the Company believes that there is a global market for equipment relating
  to online vibration monitoring system products and infrared imaging cameras
  and infrared night vision system products. The Company intends to focus its
  expansion efforts predominately on the Asian and European markets and continue
  to develop its North American market. The Company intends to continue to support,
  train and expand its existing network of distributors and sales consultants.
  The market for the equipment manufactured and distributed by the Company is
  generally described as industrial production facilities that use rotating machinery
  and electrical equipment in their process such as utilities, petroleum and petrochemical
  plants, chemical production facilities, pulp and paper mills, sawmills, shipyards
  and almost any manufacturing plant. Additionally the products have

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applications in the aerospace, medical and research industries.
  Potential enhancements and a redesign of the products will allow the products
  in the telecommunications applications to be used.

The
  Company's principal operating strategy is to develop and position products that
  take advantage of opportunities arising from the significant and ongoing changes
  in the machine condition monitoring industry. The industry is a multibillion-dollar
  capital-intensive industry. The Company anticipates that the current move toward
  deregulation in the North American and European electric utility industries
  will increase market demand for companies, which offer products that reduce
  utilities' operating costs, enhance equipment efficiency and flexibility and
  extend the expected useful lives of fixed assets.

The
  Company also intends to employ a growth strategy pursuant to which it will identify
  and develop additional products related to its core technologies and products.
  In this respect, it has recently commenced development efforts on its CMTrend
  Integrated Condition Monitoring Software Package. This software package will
  integrate different technologies to allow a comparative analysis of equipment
  monitoring. The Company also intends to acquire outside synergistic or alternative
  technologies and products.

Management
  of the Company believes that its sales and marketing organization is very experienced
  in the industrial production industry and intends to expand the manufacture
  and its distribution of its products throughout the world with a combination
  of direct sales, independent representatives and distributors, application engineers
  and service centers. The process of selling and marketing the Company's products
  involves extensive product promotion, technical selling and after-sales support.

The
  Company is well positioned to take advantage of the emerging and expanding Asian
  economies and to take advantage of the opportunities these economies present.

The
  Company has developed a customer service niche in the industry that larger more
  rigid companies cannot compete with. The Company's size allows it to adapt and
  modify its products to customer's specific needs. Additionally the Company's
  efficient operations and corporate diversity allow it to sell its products,
  which are equal to or superior to the competitor's products at a better price.

The
  application of condition monitoring techniques has grown in importance over
  recent years to become central to the maintenance function. The Company can
  provide the technical knowledge to implement and apply the full range of condition
  monitoring techniques. More importantly, the Company has the field proven practical
  experience to ensure that the potential business benefits of condition monitoring
  are realized in a sustainable way.

The
  Company has developed strategies to increase the existing market share currently
  held by Cantronic Systems Inc. The Company will take advantage of the growth
  and worldwide acceptance of the Internet as a communications tool by developing
  a Web site to provide online technical information, customer training, and an
  online customer information exchange forum. The website will additionally provide
  sales and marketing avenues and online software upgrades and customer assistance.

The
  Company has direct sales offices in North America and China and distributors/consultants
  in Taiwan, Korea, Singapore, Egypt and China with respect to condition monitoring
  and intends to establish offices in these countries. The Company intends to
  expand this distribution network to cover most of the countries in Europe, Latin
  America, Asia, Australia, South Africa and North America. The Company further
  intends to continue to grow through mergers and acquisitions and will utilize
  joint venture opportunities to gain market share.

The
  Company intends to create, expand and develop research and development centers
  in Asia and North America. The Company will use a virtual private network technology
  to link and operate the centers. Virtual private network will allow the centers
  to communicate and operate as a single entity.

The
  expanded manufacturing facilities of the Company combined with the efficient
  operational and administrative systems will provide the Company with economies
  of scale and low overhead making it very competitive with a low manufacturing
  cost.

Intellectual Property

The
  Company relies upon confidentiality agreements to be entered into by all employees,
  directors, officers, consultants and contractors to protect its intellectual
  property. The Company intends to register all of its intellectual property in
  the future.

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Sources of Raw Materials and Principal Suppliers

There
  are no principal suppliers or sources of raw materials upon which the Company
  is dependent. The present suppliers or sources of raw materials can be changed
  without any detrimental effect on the operations of the Company.

Government Approval

The
  Company's infrared imaging products are a controlled commodity which requires
  valid export license from the Government of Canada and in some cases may also
  require export license from the US Department of State. The Company needs to
  apply for these licenses once customers place their orders. The export license
  can be individual or general depending upon the country of export. The Companys
  other products such as vibration monitoring systems are not controlled and therefore
  do not require export licenses.

Employees

The
  Company including its wholly owned subsidiaries has a total of 14 full-time
  employees and two part-time employees.

Material Agreements

Acquisition
  of Cantronic Systems Inc., a British Columbia Corporation

On
  December 18, 2000, the Company (formerly known as Solo & Hurst, Inc.) acquired
  all of the outstanding common stock of Cantronic Systems, Inc., a corporation
  incorporated pursuant to the laws of the Province of British Columbia, Canada
  in a business combination described as a "reverse acquisition." For accounting
  purposes, the transaction has been treated as the acquisition of Solo &
  Hurst by Cantronic Systems Inc. As part of the transaction, Solo & Hurst
  changed its name to Cantronics Corporation. Immediately prior to the transaction,
  Solo & Hurst had 60,000,000 shares of common stock outstanding (after taking
  into account the 20 for 1 forward split). As part of Solo & Hursts
  reorganization with Cantronic Systems, Inc., Solo & Hurst Shareholders turned
  over 59,000,000 shares of its common stock (after taking into account the 20
  for 1 forward split) to the shareholders and affiliates of Cantronic Systems
  Inc. in exchange for 100% of the common shares of Cantronic Systems Inc.

The
  transaction was accounted for as a recapitalization using accounting principles
  applicable to reverse acquisitions. Following reverse acquisition accounting,
  financial statements subsequent to the closing date are presented as a continuation
  of Cantronic Systems Inc. The value assigned to common stock of the Company
  on the acquisition based on the fair value of the net assets of the Company
  at the date of acquisition was $Nil.

Acquisition
  of Academy of Infrared Thermography, Inc. a Washington corporation and Condition
  
            Monitoring Training
  Institute, Inc. a British Columbia Corporation

On
  February 2, 2001, the Company acquired Academy of Infrared Thermography, Inc.,
  a Washington corporation, and Condition Monitoring Training Institute, Inc.,
  a corporation organized pursuant to the laws of the Province of British Columbia.
  The Company issued 2,750,000 common shares to Ron Newport ("Mr. Newport"), the
  President of Academy of Infrared Thermography, Inc. and Condition Monitoring
  Training Institute, Inc. in exchange for 100% of all of the issued and outstanding
  shares of Academy of Infrared Thermography, Inc., and Condition Monitoring Training
  Institute, Inc. The 2,750,000 common shares contain the following voluntary
  restrictions: 1,500,000 common shares are restricted for three years and the
  remaining 1,250,000 common shares are restricted for five years. The acquisition
  of CMTI and AIRT was accounted for using the purchase method using the fair
  value of the net assets acquired.

Consulting
  and Employment Agreements

As
  of January 31, 2002, there is no outstanding consulting and employment agreement
  with the Company.

RISK FACTORS

The
  securities of the Company are highly speculative. A prospective investor or
  other person reviewing the Company should not consider an investment unless
  the investor is capable of sustaining an economic loss of the

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entire investment. The Company recommends careful consideration
  of the following risks and uncertainties in addition to other information in
  this Annual Report in evaluating the Company and its business before purchasing
  shares of its common stock. Certain risks are associated with the Companys
  business, including the following:

Technological
  Change

The
  Company's markets are subject to rapid technological change. Such changes require
  it to devote significant resources to incorporating new technology into its
  products while often maintaining existing products that use older technology.
  Although the Company expects sales of its products to continue generating a
  significant portion of its revenue, the Company must always be prepared to offer
  products that incorporate new technology. Delays in the introduction or shipment
  of new or enhanced products, the Company's inability to timely develop and introduce
  such new products, the failure of such products to gain significant market acceptance,
  problems associated with new product transitions or the introduction or market
  acceptance of competing technology that renders its technology obsolete or less
  desirable would have a material adverse effect on the Company's business, financial
  condition and results of operations.

Competition

Competition
  in the market for the Company's equipment is significant. The rapid technological
  advances also result in increased competition within the industry. The speed
  with which companies can identify new applications for existing products, develop
  products to meet those needs and supply commercial quantities at low prices
  to the market are important competitive factors. Additionally, the Company's
  products compete indirectly with numerous other products such as image intensifiers
  and low-light cameras for limited military and governmental funds.

Financial
  Resources

Many
  of the Company's competitors have greater financial, technical and marketing
  resources. All of these factors result in greater challenges from the Company's
  existing competitors as well as increasing competition from new challengers
  and require the Company to continue investing in and focusing on research and
  development and new product innovation. No assurance can be given that the Company
  will be able to compete effectively in the future.

Dependence
  on Key Customers

The
  Company's customers are companies primarily involved in technology-related industries.
  The Company's business and growth is largely dependent on the continued demand
  for the Company's products from customers in technology-related industries and
  industries targeted by the Company. A loss of any one of the Company's key customers
  could have a material adverse effect on the Company's business, results of operations,
  growth prospects and financial condition.

Doing
  Business in Asia Exposes the Company to Additional Risks

The
  Company markets its products to customers substantially located in Asia, including
  customers located in Asia. Consequently, investment in the Company may be adversely
  affected by the political, social and economic environment in Asia. Under its
  current leadership, Asia has been pursuing economic reform policies, including
  the encouragement of private economic activity and greater economic decentralization.
  There can be no assurance, however, that the Chinese government will continue
  to pursue such policies, that such policies will be successful if pursued, or
  that such policies will not be significantly altered from time to time. Moreover,
  economic reforms and growth in Asia have been more successful in certain provinces
  than others, and the continuation or increase of such disparities could affect
  the political or social stability of Asia.

Development
  of New Products

The
  Company depends upon the successful development and acceptance of new products.
  The Company's future success depends on its ability to continue to improve its
  existing products and to develop new products using the latest technology that
  can satisfy customer requirements. The Company is also investing a significant
  amount of its financial resources in the enhancement of some of its existing
  products. The Company cannot be certain that it will successfully complete these
  enhancements within the necessary time period or that customers will accept
  its new products, or any future products.

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Proprietary
  Technology

The
  Company may be unable to adequately protect its proprietary technology. The
  Company's ability to compete successfully and achieve future revenue growth
  depends in part on its ability to protect the proprietary technology and operate
  without infringing the rights of others. To accomplish this, the Company relies
  on a combination of confidentiality agreements and contractual provisions to
  protect its proprietary rights. Any failure by the Company to meaningfully protect
  its intellectual property could have a material adverse effect on the Company's
  business, financial condition and results of operations. All directors, officers,
  employees and contractors of the Company are required to enter into confidentiality
  agreements with the Company.

Defects
  or Errors

The
  Company's products may suffer from defects or errors. The Company's products
  use complex system designs and components that may contain errors or defects,
  particularly when new technology is incorporated into its products or new versions
  are released. While the Company has not yet had to recall a product, if any
  of its products are defective, the Company might be required to redesign or
  recall those products or pay damages. Such an event could result in significant
  expenses, disrupt sales and affect the Company's reputation and that of its
  products, which would have a material adverse effect on the Company's business,
  financial condition and results of operations.

Key
  Personnel

The
  future success of the Company is dependent upon its ability to attract and retain
  key management personnel. The development of the Company could be materially
  affected if it is unable to attract financial and management personnel and technical
  development individuals. The Company faces competition from industry to hire
  and maintain key personnel.

The
  Company is dependent upon the personal efforts and commitment of the management
  of the Company, particularly James Zahn, who is responsible for the development
  of current and future products. The Company is highly independent on James Zahn,
  and the loss of his services would significantly impede the Company's achievement
  of its objectives.

Need
  for Additional Resources for Growth

The
  Company is uncertain of its ability to obtain additional financing for future
  capital needs. The Company will need to raise additional funds in order to fund
  more rapid expansion, to develop new or enhance existing services or products,
  to respond to competitive pressures or to acquire complementary products, businesses
  or technologies. There can be no assurance that additional financing will be
  available on terms favourable to the Company, or at all. If adequate funds are
  not available or are not available on acceptable terms, then the Companys
  ability to fund its expansion, take advantage of potential acquisition opportunities,
  develop or enhance services or products or respond to competitive pressures
  could be significantly limited. Such limitation could have a material adverse
  effect on the Companys business, results of operations, financial condition
  and/or prospects.

Limited
  Operating History

Cantronic
  Systems Inc. (the Companys predecessor business) was incorporated on February
  28, 1997. As such, the Company has a relatively limited operating history. The
  Company has recorded net income for each of the last two fiscal years, including
  income of $77,648 for the year ended January 31, 2002 and $47,241 for the year
  ended January 31, 2000. The Company incurred losses prior to the January 31,
  2000 fiscal year. There can be no assurance that the Company will generate enough
  revenues from its operations to generate a profit in the future, if at all.

Working
  Capital Requirements

As
  of January 31, 2002, the Company had working capital deficiency of $160,749.,
  which includes $141,844. payable to the Companys directors. These amounts
  due to the directors are due on demand. The Company currently anticipates that
  it will fund its growth from revenues and cash flow from operations. However,
  the Companys working capital requirements may increase substantially in
  order to accommodate growth if the Company identifies new opportunities to expand
  its operations and elects to aggressively pursue new markets or to offer new
  services.

There
  can be no assurance that the Company will be successful in funding current operations
  from operating cash flow nor is there any assurance that, if needed, the required
  financing for its expansion strategy will

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be on terms acceptable to the Company, if at all. If the Company
  cannot obtain sufficient funds to finance current operations or necessary expansion
  costs (if any), some or all of its plans may be significantly delayed or abandoned.

ITEM 2.     PROPERTIES.

The
  Company presently occupies office space at 63A Clipper Street, Coquitlam, BC,
  Canada V3K 6X2. This is provided to the Company on a rent free basis by its
  wholly owned subsidiary Cantronic Systems, Inc.. Cantronic Systems Inc. entered
  into a premises lease dated June 26, 2001 related to its executive office and
  production facility at this location. The lease expires on July 30, 2003. Cantronic
  Systems, Inc. pays a monthly rent of $5,538. under the terms of the lease.

ITEM 3.     LEGAL PROCEEDINGS.

To
  the best of its knowledge, as of January 31, 2002, the Company is not subject
  to any active or pending legal proceedings or claims against it or any of its
  properties. However, from time to time, the Company may become subject to claims
  and litigation generally associated with any business venture.

ITEM 4.     SUBMISSION OR MATTERS
  TO A VOTE OF SECURITY HOLDERS.

No
  matters were submitted to a vote of security holders during the fourth quarter
  of the fiscal year covered by this report.

PART II

ITEM 5.     MARKET FOR COMMON
  EQUITY AND RELATED STOCKHOLDER MATTERS.

Solo
  & Hurst, Inc. filed a registration statement with the Securities and Exchange
  Commission on January 24, 2000. The Company's common shares have never traded
  on any stock exchange or quotation system.

Based
  upon the Company's records, as of January 31, 2002, there were 47 shareholders
  of record of the Companys common shares. Holders with United States addresses
  collectively held 1,075,000 common shares, or approximately two percent (2%)
  of the Companys 63,243,600 issued and outstanding common shares.

The
  Company has never paid dividends on its common shares and does not anticipate
  paying any dividends in the foreseeable future. The future dividend policy of
  the Company will be determined from time to time by the Board of Directors.

Recent
  Sales of Unregistered Securities.

The
  following sets forth certain information concerning the currently outstanding
  securities of the Company which the Company sold or issued during the last fiscal
  year without the registration of the securities under the Securities Act in
  reliance on exemptions from such registration requirements.

On
  February 2, 2001, the Company acquired 100% of the issued and outstanding share
  capital of CMTI, a company incorporated pursuant to the laws of the Province
  of British Columbia, and it's wholly owned US subsidiary, AIRT, in a share exchange
  transaction. As a result of the transaction, the Company issued 2,750,000 common
  shares to the shareholders of CMTI. The issuance of the securities was made
  in reliance on an exemption from registration with the commission provided by
  section 4(2) of the Securities Act of 1933, as amended, and rule 504 of regulation
  D promulgated thereunder by the Securities and Exchange Commission.

Under
  the Private Placement Memorandum dated February 3, 2001 the company offered
  a minimum of 200,000 Common Shares and a maximum of 8,000,000 Common Shares
  at $0.75 Per Share. As of May 31, 2001, in connection with this Private Placement
  Memorandum, the Company sold 418,600 Common Shares for a total proceeds of $313,950.
  These Common Shares have not been approved or disapproved by the Securities
  And

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Exchange Commission nor any state or provincial securities
  administrator, including the British Columbia Securities Commission. The offering
  was made in reliance on an exemption from registration with the commission provided
  by the section 4(2) of the Securities Act of 1933, as amended, and rule 506
  of regulation D promulgated thereunder by the Securities and Exchange Commission.
  As there is no market for these securities, it may be difficult or even impossible
  for the purchaser to sell them.

ITEM 6.     MANAGEMENT'S DISCUSSION
  AND ANALYSIS

The
  following discussion should be read in conjunction with our financial statements
  and the related notes that appear elsewhere in this Annual Report. The following
  discussion contains forward-looking statements that reflect our plans, estimates
  and beliefs. Our actual results could differ materially from those discussed
  in the forward looking statements. Factors that could cause or contribute to
  such differences include, but are not limited to, those discussed below and
  elsewhere in this Annual Report, particularly in the section entitled Risk
  Factors.

SUMMARY FINANCIAL DATA

The
  following table sets forth selected financial data regarding the Companys
  consolidated operating results and financial position for the years ended January
  31, 2002 and 2001 which are derived from the audited financial statements appearing
  elsewhere in this Annual Report. As a result of our acquisition of Cantronic
  Systems Inc. (CSI) via reverse acquisition on December 18, 2000, our financial
  statements are presented as a continuation of CSI. Accordingly, financial information
  pertaining to periods prior to the acquisition is that of CSI. The information
  set forth below should be read in conjunction with Managements Discussion
  And Analysis of Financial Condition And Results of Operation and our financial
  statements appearing elsewhere in this Annual Report.

The
  Company was incorporated under the laws of the State of Nevada as Solo &
  Hurst, Inc., and was inactive until its acquisition of CSI. In December 2000,
  the Company acquired CSI through a share exchange agreement with the shareholder
  of CSI, which resulted in CSI becoming a wholly-owned subsidiary of Solo &
  Hurst, Inc.

Concurrent
  with the acquisition, Solo & Hurst, Inc. changed its legal name to Cantronics
  Corporation. The Company is engaged in the operation of designing, manufacturing
  and marketing industrial condition monitoring equipment, and infrared imaging
  systems through its Canadian subsidiary CSI.

The
  following selected financial data is qualified in its entirety by, and should
  be read in conjunction with, the consolidated financial statement and notes
  thereto included elsewhere in this document. The selected financial data and
  the Companys consolidated financial statements are expressed in U.S. dollars.

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|                                  | **Fiscal Year Ended**
|--------------------------------- | ---------------------
|For the year ended January 31:    | 2002                 
|Sales                             | $3,138.066           
|Cost of sales                     | $2,034,276           
|Gross Profit                      | $1,103.790           
|General & Administrative Expenses | 1,032,513            
|Income from operations            | 71,277               
|Net Income for the year           | 77,648               
|Net Income per share              | 0.01                 
|as at January 31:                 |                      
|Working Capital (Deficiency)      | 160,749              
|Total Assets                      | 1,429,739            
|Total Liabilities                 | 732,457              
|Stockholders' Equity (Deficit)    | 697,282              
|Long-term obligations             | NIL                  

The
  following discussion and analysis should be read in conjunction with the audited
  consolidated financial statements and notes thereto appearing elsewhere in this
  Form 10-KSB.

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

The
  following discussion and analysis discusses trends in Companys financial
  condition and results of operations for the three fiscal years ended January
  31, 2002 and 2001.

RESULTS OF OPERATIONS

Sales
  for the twelve month period ended January 31, 2002 (Fiscal 2002)
  decreased to $3,138,066. from $1,113,392 for the same period ended January 31,
  2001 (Fiscal 2001), a decrease of 182%. Revenue will vary from year
  to year because the Company supplies product to its customers on large contract
  orders. At January 31, 2001 the Company had two large contracts in progress
  for which no revenue was recognized. These two large contracts were completed
  and shipped to the customers subsequent to January 31, 2001 and will be recognized
  as sales for the fiscal year ended January 31, 2002. The total sales value of
  these two contracts amounted to $876,500.

Gross
  profit on sales increased by 237% from $327,495 in Fiscal 2001 to $1,103,790
  in Fiscal 2002. The increase in gross profit was achieved by obtaining higher
  prices for the products of the Company.

The
  Companys administrative expenses in Fiscal 2002 increased by $726,510
  from Fiscal 2001 reflecting an increase in salary expense as a result of an
  increase in the number of full time employees and an increase in the amount
  of salaries paid to employees of the Companyand an increase in professional
  fees as a result of the costs associated with the Company's reporting obligations
  in connection with the acquisition of Cantronic Systems Inc. and increased costs
  in connection with the audits of that company to comply with Securities Exchange
  Commission requirements.

Despite
  the substantial increase in administrative expenses in Fiscal 2002 income from
  operations increases $49,785 from $21,492 from Fiscal 2001. Net income for Fiscal
  2002 was higher than Fiscal 2001 by $30,407 to $77,648. This was substantially
  achieved through sales increased and gross profit improved.

LIQUIDITY AND CAPITAL RESOURCES

To
  date, the Company has generally financed its present level of operations from
  operating cash flow. Additionally, the Companys billing practices require
  advance deposits from its customers before supplying products.

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As
  of January 31, 2002 the Company had working capital of $160,749, but cash and
  equivalents of $236,139 and an inventory of $210,354 as compared to $271,224
  and $145,843 respectively, at Fiscal 2001. Included in the working capital is
  an amount of $141,844 (Fiscal 2001 - $281,826 due to) due from directors of
  the Company. The indebtedness from the directors is unsecured, non-interest
  bearing without any specific terms for repayment. The Company believes that
  its cash flow from operations, will be sufficient to fund its cash requirements
  through the year ended January 31, 2003.

Net
  cash provided by operating activities in Fiscal 2002 was $69,488 compared to
  $156,051 in Fiscal 2001. The decrease in cash from operating activities was
  due to the increase of accounts receivable from sales occurring late in Fiscal
  2000 and orders received at January 31, 2001 but for which advance deposits
  were not received yet. Cash used in these areas were offset by the increase
  of payables associated with the sales occurring at the end of Fiscal 2002.

Net
  cash provided by investing activities in Fiscal 2002 was $143,394 compared to
  $238,776 used in Fiscal 2001. Purchases of property and equipment remained constant
  between the periods. Substantially the entire increase in Fiscal 2002 is attributable
  to decrease in purchase of various available for sale investments in Fiscal
  2002 of which Nilwas purchased in 2002 ($358,899 in 2001). The investments purchased
  before January 31, 2001 were subsequently sold in March 2001 for approximately
  $259,000.

During
  Fiscal 2002, the Company lent $141,844 to an additional $29,572 borrowed from
  that director in Fiscal 2001. As stated previously, the Company completed the
  acquisitions of Cantronic Systems Inc. (via reverse acquisition) and CMTI/AIRT.
  Both acquisitions were completed with common stock and did not result in the
  use of cash.

The
  Companys business activities and operations have been funded to date through,
  among other things, sales from operation, which was $3,138,066 for Fiscal 2002.
  Although the Company believes it has sufficient working capital and will receive
  sufficient sales from operations to fund its operations, there can be no assurance
  that the Companys actual expenditures will not exceed projected expenditures
  or that the Company will have sufficient sales from operations to meet its actual
  expenditure requirements. Subsequent to January 31, 2001, the Company raised
  a further $313,950 upon the issuance of 418,600 Common Shares pursuant to a
  private placement.

In
  addition, the Company may require additional working capital if the Company
  elects to expand into new geographic markets or offer new products and services
  to end users. If the Companys sales from operations are insufficient to
  fund its operations, there can also be no assurance that additional financing,
  if any, will be available on terms acceptable to the Company. If the actual
  expenditures for such cost exceed the estimated costs or if events occur that
  require additional expenditures, the Company will be required to raise additional
  financing or to defer expenditures to meet other obligations. The failure to
  meet certain expenditures may cause the Company to default on material obligations
  and such default may have a material adverse effect on the Companys business
  and results of operations.

OTHER MATTERS

The
  Company was incorporated under the Nevada Corporation Code on February 25, 1998.
  The Company has three wholly owned operating subsidiaries, two of which are
  incorporated under the Company Act, British Columbia and the third one is incorporated
  in the state of Washington. The Companys financial results are quantified
  in U.S. dollars and a majority of the Companys obligations and expenditures
  with respect to its operations are incurred in U.S. dollars. The Company may
  in the future raise additional equity funding or financing denominated in Canadian
  dollars. Although the Company does not believe it currently has any materially
  significant market risks relating to its operations resulting from foreign exchange
  rates, if the Company enters into financing or other business arrangements denominated
  in currency other than the U.S. dollar, variations in the exchange rate may
  give rise to foreign exchange gains or losses that may be significant.

The
  Company currently has no long-term debt obligations. The Company does not use
  financial instruments for trading purposes and is not a party to any leverage
  derivatives. In the event the Company experiences substantial growth in the
  future, the Companys business and results of operations may be materially
  affected by changes in interest rates and certain other credit risk associated
  with its operations.

19

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Recently
  Issued Accounting Standards

In
  June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments
  and Hedging Activities, which was subsequently amended by SFAS No. 137
  and 138, established accounting and reporting standards requiring that every
  derivative instrument, including certain derivative instruments embedded in
  other contracts, be recorded in the balance sheet as either an asset or liability
  measured at its fair value for fiscal quarters of fiscal years beginning after
  June 15, 2000. As the Company has no derivative instruments outstanding at January
  31, 2001, it has determined that these SFAS will not have a significant impact
  on the Companys consolidated financial position, results of operations
  or cash flows on adoption.

ITEM 7.     FINANCIAL STATEMENTS
  AND SUPPLEMENTARY DATA.

The
  information required by this item is included in pages F-1 through F-20 attached
  hereto and incorporated herein by reference.

---



ITEM 8.     CHANGES IN AND DISAGREEMENTS
  WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURES.

On
  March 19, 2001, on approval by the Board of Directors, the Company engaged BDO
  Dunwoody LLP, Chartered Accountants, to audit its consolidated financial statements
  for the fiscal year ended January 31, 2001. During the Company's two most recent
  fiscal years, and any subsequent interim periods preceding the change in accountants,
  there were no disagreements with Michael L. Stuck, CPA, the former auditor of
  the Company on any matter of accounting principles or practices, financial statement
  disclosure, or auditing scope procedure. The reports of Michael L. Stuck, CPA
  for the past two fiscal years did not contain any adverse opinion or any disclaimer
  of opinion and were not qualified or modified as to uncertainty, audit scope
  or accounting principles, with the exception of a going concern qualification
  with respect to the 2000 and 1999 fiscal years of Solo & Hurst, Inc. The
  decision to change accountants was based on the reverse acquisition with Cantronic
  Systems Inc The Company changed its financial year end from December 31, to
  January 31 effective upon completion of the acquisition of Cantronic Systems
  Inc. to coincide with the year end of Cantronic Systems Inc.

On
  July 30, 2001, on approval by the Board of Directors, the Company engaged Davidson
  & Company, Chartered Accountants, to audit its consolidated financial statements
  for the fiscal year ended January 31, 2002. There were no disagreements with
  Michael L. Stuck, CPA, the former auditor of the Company on any matter of accounting
  principles or practices, financial statement disclosure, or auditing scope procedure.
  The reports of BDO Dunwoody LLP for the past fiscal periods did not contain
  any adverse opinion or any disclaimer of opinion and were not qualified or modified
  as to uncertainty, audit scope or accounting principles. The decision to change
  accountants was based on the needs of the Company.

The
  Company did not consult Davidson & Company, Chartered Accountants, regarding
  the application of accounting principles to any specific completed or contemplated
  transaction or the type of audit opinion that might be rendered on the Companys
  consolidated financial statements.

PART III

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

All
  of the directors of the Company are elected annually by the shareholders and
  hold office until the next annual general meeting of shareholders or until their
  successors are duly elected and qualified, unless they sooner resign or cease
  to be directors in accordance with the Company By-Laws or the Nevada Corporation
  Code The Companys last annual regular general meeting was held on April
  22, 2002. The Company's executive officers are appointed annually by the Board
  of Directors and hold office for one year, unless they sooner resign or cease
  to be directors in accordance with the Company By-Laws or the Nevada Corporation
  Code.

Helen
  Leung, the Secretary, Treasurer and a member of the Board of Directors of the
  Company is the sister of James Zahn, the President, Chief Executive Officer
  and a member of the Board of Directors of the Company. There is no arrangement
  or understanding between any executive officer and any other person pursuant
  to which any

20

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person was selected as an executive officer of the Company.
  The Company intends to maintain at least one independent director on its Board
  of Directors.

As of January 31, 2002, the following persons were directors
  and/or executive officers of the Company:

|Name and present office held                                                                                        | Director/Officer since(2) | Principal occupation and if not atpresent an elected
      director,occupation during the preceding fiveyears                                                                                                                               
|------------------------------------------------------------------------------------------------------------------- | ------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|James Zahn (1)
        Port Moody, British Columbia, Canada
        President, Chief Executive Officer and Director | December 2000             | President and Chief Executive Officer of the Company December
      2000 to date. Vice President of Cantronic Systems Inc. since February 1997
      to date. Owner/Manager CSI Industrial Systems Ltd. from 1992 to date.                  
|Helen Leung
        Burnaby, British Columbia, CanadaSecretary, Treasurer and Director                              | December 2000             | Secretary, Treasurer, Director and Executive Assistant of
      the Company December 2000 to date. Secretary, Treasurer, Director and Executive
      Assistant of the Cantronic Systems Inc. April 1997 to date. Student during
      1996.
|Paul Xiong (1)
        HongKong, SAR, China Director                                                                | March 2001                | Chairman of Anderson International Holdings Limited in Hong
      Kong 1999to present. Vice-Chairman of China Power Investment Ltd. May 2000
      to date. Vice-Chairman of Hefei World Trade Centre Ltd 1995 to date.                     
|Ron Newport
        Kamloops, BC, CanadaVice President, Infrared Imaging                                            | February 2001             | Vice President of Cantronics Corporation February 2001 to
      date. Owner and Director of CMTI and AIRT from 1996 to February 2001.                                                                                                       

|(1) | Member of the Companys audit committee.                                        
|--- | --------------------------------------------------------------------------------
|(2) | Directors and officers serve until their successors are nominated and appointed.

James Zahn, President, Chief Executive Officer and Director,
  Age 37

Mr.
  Zahn is the founder of the Company. Mr. Zahn has guided all of the activities
  of the Company since its inception and continues to lead its efforts into the
  future. Mr. Zahn has conducted extensive worldwide research in the vibration
  condition monitoring and electro-optics fields, and is a prominent researcher
  in these industries. Mr. Zahn has a firmly established reputation as a mechanical
  Engineer. Mr. Zahn obtained a B.Sc. in Mechanical Engineering in 1984 from Zhejiang
  University, a Masters Degree in Mechanical Engineering China in 1987 from Zhejiang
  University, China; and a M. Sc. Degree, Mechanical Engineering in 1989 from
  the University of British Columbia, Mr. Zahn's was employed by Suncor Inc.,
  Fort MacMurray, Alberta from 1989 to 1993 as a Rotating Equipment Engineer,
  at which time he also received Professional Engineer Status. From 1992 to the
  Present Mr. Zahn has been Owner/Manager of CSI Industrial Systems Ltd., Vancouver
  B.C, Canada.

Helen Leung, Secretary, Treasurer and Director, Age 32

Ms.
  Leung develops individual account development plans to establish an effective
  penetration strategy for the Company. Ms. Leung's duties also include maintaining
  accurate and comprehensive customer account information and she is responsible
  to administer and update the Company's Web site and advertisements. Ms. Leung's
  skills allow her to work effectively with associated internal sales network
  personnel and other external complimenting distribution channels.

21

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Paul Xiong, Director, Age 41

Paul Xiong is primarily responsible for the strategic planning
  and raising finance for the Company. Mr. Xiong has served as an executive director
  on the boards of several listed companies including King Pacific International
  Holdings Limited, previously called Yiuwing Holdings on the Hong Kong Stock
  Exchange and the Jenson International Inc. (JENS) OTCBB. Mr. Xiong was employed
  by the University of British Columbia as a research engineer from 1990 to 1992.
  Mr. Xiong was employed by MacMillan Bloedel Research in Canada as a research
  scientist from 1992 to 1993. Mr. Xiong obtained a Masters Degree in Engineering
  in 1984 from Anhui Agricultural University, China; and a Masters Degree
  in Science in 1990 from the University of British Columbia.

Ron Newport, Vice-President, Infrared Imaging, Age 50

Mr.
  Newport is the founder of AIRT. Mr. Newport has 22 years in the infrared thermography
  industry. Mr. Newport has guided all AIRT's activities since inception over
  20 year ago and will lead Cantronics' infrared activities in the future. Mr.
  Newport is recognized as the leading educator, developer, and promoter of infrared
  thermography. Mr. Newport has published may articles with respect to infrared
  thermography. Mr Newport speaks at conferences and symposia throughout the world,
  for organizations such as the organization for Predictive and Preventive Maintenance,
  the organization for American Society of Non-Destructive Testing, and the organization
  for Maintenance Technology, United Kingdom. Mr. Newport also works on many committees
  developing and establishing standards and procedures for infrared thermography,
  such as ASNT T/IR Committee, ISO Infrared method, International Thermography
  Association. (the "ITA"). Mr. Newport is the Chairman of the ITA.

Members
  of the Board of Directors are elected by the holders of the Companys common
  shares to represent the interests of all shareholders. The Board of Directors
  meets periodically to review significant developments affecting the Company
  and to act on matters requiring Board approval. Although the Board of Directors
  delegates many matters to others, it reserves certain powers and functions to
  itself.

Board
  Committees

The
  only standing committee of the Board of Directors of the Company is an Audit
  Committee. The Audit Committee of the Companys Board of Directors currently
  consists of three individuals, being two directors and an officer of the Company.
  This committee is directed to review the scope, cost and results of the independent
  audit of the Companys books and records, the results of the annual audit
  with management and the adequacy of the Companys accounting, financial
  and operating controls; to recommend annually to the Board of Directors the
  selection of the independent auditors; to consider proposals made by the Companys
  independent auditors for consulting work; and to report to the Board of Directors,
  when so requested, on any accounting or financial matters. Such reviews are
  carried out with the assistance of the Companys auditors and senior financial
  management. None of the Companys directors or executive officers are parties
  to any arrangement or understanding with any other person pursuant to which
  said individual was elected as a director or officer of the Company.

Board
  and Committee Meetings

During
  2001, the Board of Directors met only once including participants by telephone.
  Each director attended the Board meeting and meeting of Committees on which
  they served. During 2001, the Audit Committee was not required and therefore
  did not meet. Subsequent to January 31, 2001, the Board of Directors met once.
  There are no arrangements or understandings among any of the directors or officers
  of the Company regarding their election as directors or officers.

Section
  16(a) Beneficial Ownership Reporting Compliance

The
  following table sets forth information concerning the beneficial ownership of
  the Company's outstanding Common Shares as of January 31, 2002 for, each of
  the Company's directors, executive officers and beneficial owners of more than
  10% of the Company's Common Shares. Except as otherwise indicated, the Company
  believes the beneficial owners of the Common Shares listed below, based on information
  furnished by them, have sole voting and investment power over the number of
  shares listed opposite their names.

22

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|Title of Class | Identity of 
      Persons or Group | Number of Shares 
      Owned | Percentage of Class(1)
|-------------- | ----------------------------------- | ----------------------------- | ----------------------
|Common Shares  | James Zahn                          | 7,200,000                     | 11.4%                 
|Common Shares  | Helen Leung                         | 462,000                       | 0.7%                  
|Common Shares  | Paul Xiong                          | NIL                           | 0%                    
|Common Shares  | Caillan Yu                          | 9,000,000                     | 14.2%                 
|Common Shares  | Zhan International Corp.            | 20,400,000                    | 32.2%                 
|Common Shares  | Ron Newport                         | 2,750,000                     | 04,3%                 

(1)     Based
  on the 63,243,600 common shares outstanding as of January 31, 2002.

The
  individuals and corporation mentioned above have failed to file on a timely
  basis, reports required by section 16(a) of the Securities and Exchange Act
  of 1934.

ITEM 10.     EXECUTIVE COMPENSATION.

Directors
  are entitled to reimbursement for reasonable travel and other out-of-pocket
  expenses incurred in connection with attendance at meetings of the Board of
  Directors. The Board of Directors makes separate remuneration to any director
  undertaking services on behalf of the Company other than services ordinarily
  required of a director. Other than indicated below, no director received any
  compensation for his services as a director, including any committee participation
  or special assignments.

The
  following table sets forth the compensation paid to the Companys Named
  Executive Officer for the years indicated. No other Named Executive Officer
  of the Company earned a salary and bonus for such fiscal year in excess of $100,000.

|Name and Principal Position                   | Year Ended                  | Annual Compensation        | Long Term Compensation                   | All OtherCompensation($)                        
|--------------------------------------------- | --------------------------- | -------------------------- | ---------------------------------------- | ------------------------------------------------
|Awards                                        | Payouts                    
|Salary(1)($)                                  | Bonus($)                    | OtherAnnualCompensation($) | SecuritiesUnderOptions/SARs(2)Granted(#) | RestrictedShares
      orRestrictedShareUnits($)
|James ZahnPresident andChief ExecutiveOfficer | 2002/01/31
      2001/01/31 | 50,342
      53,849        | Nil
      Nil                            | Nil
      Nil                                   

|(1) | All dollar amounts are in US dollars.                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | SAR or stock appreciation right means
      a right granted by the Company, as compensation for services rendered, to
      receive a payment of cash or an issue or transfer of securities based wholly
      or in part on changes in the trading price of publicly traded securities
      of the Company.                                        
|(3) | LTIP or long term incentive plan means
      any plan that provides compensation intended to serve as incentive for performance
      to occur over a period longer than one financial year, but does not include
      option or stock appreciation right plans or plans for compensation through
      restricted shares or restricted share units.

Compensation of Directors

The
  Company has no standard arrangement pursuant to which any of the other directors
  are compensated by the Company for their services in their capacity as directors.

23

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Option
  Grants

No
  stock options or stock appreciation rights were granted by the Company during
  the last fiscal year of the Company ended January 31, 2002.

Options
  Outstanding And Option Exercises

No
  stock options or stock appreciation rights of the Company were outstanding during
  the last fiscal year of the Company ended January 31, 2002.

Report
  On Repricing Of Options/Stock Appreciation Rights

The
  Company did not re-price any incentive stock options or stock appreciation rights
  during the fiscal year of the Company ended January 31, 2002.

Long
  Term Incentive Plans

The
  Company did not award any long term incentive plans during the fiscal year of
  the Company ended January 31, 2002.

Employment
  and Employee Incentive Contracts

The
  Company has no plan or arrangement whereby any Named Executive Officer may be
  compensated in an amount exceeding $100,000 in the event of that officers
  resignation, retirement or other termination of employment, or in the event
  of a change of control of the Company or a subsidiary or a change in the Named
  Executive Officers responsibilities following such a change of control.

As
  of January 31, 2002, there was no outstanding consulting or employment agreements
  by the Company.

Director
  Compensation

The
  Company does not currently pay any cash compensation to directors for serving
  on its Board of Directors, however it does reimburse directors for out-of-pocket
  expenses for attending board and committee meetings. The Company does not provide
  additional compensation for committee participation or special assignments of
  the Board of Directors.

Indemnification
  of Directors, Officers and Others

The
  articles of incorporation of the Company limit the liability of directors to
  the maximum extent permitted by Nevada law. This limitation of liability is
  subject to exceptions including intentional misconduct, obtaining an improper
  personal benefit and abdication or reckless disregard of director duties. The
  articles of incorporation and bylaws of the Company provide that the Company
  may indemnify its directors, officer, employees and other agents to the fullest
  extent permitted by law. The bylaws of the Company permit the Company to secure
  insurance on behalf of any officer, director, employee or other agent for any
  liability arising out of his or her actions in such capacity, regardless of
  whether the bylaws would permit indemnification. The Company does not currently
  have such an insurance policy in place.

Insofar
  as indemnification for liabilities arising under the Securities Act of 1933
  may be permitted to directors, officers and or persons controlling the Company
  pursuant to the foregoing provisions, or otherwise, the Company has been informed
  that in the opinion of the Securities and Exchange Commission such indemnification
  is against public policy as expressed in the Securities Act of 1933 and is,
  therefore, unenforceable.

ITEM 11.     SECURITY OWNERSHIP
  OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The
  Company is authorized to issue 90,000,000 common shares (the Common Shares)
  with a par value of $0.001 per Common Share and 5,000,000 preferred shares (the
  "Preferred Shares") with a par value of $0.001 per Preferred Share. As of January
  31, 2002, 63,243,600 Common Shares and no Preferred Shares were issued and outstanding.
  As of May 31, 2002, 63,243,600 Common Shares and No Preferred Shares were issued
  and outstanding.

24

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Rule
  13d-3 under the Securities Exchange Act defines the term, "beneficial ownership".
  Under this rule, the term includes shares over which the indicated beneficial
  owner exercises voting and/or investment power. The rules also deem common shares
  subject to options currently exercisable, or exercisable within 60 days, to
  be outstanding for purposes of computing the percentage ownership of the person
  holding the options but do not deem such stock to be outstanding for purposes
  of computing the percentage ownership of any other person.

The
  following table sets forth information concerning the beneficial ownership of
  the Companys outstanding common shares as of January 31, 2002 for, each
  of the Companys directors and executive officers individually, each person
  or group that the Company knows owns beneficially more than 5% of the Companys
  common shares, and all directors and executive officers as a group. Except as
  otherwise indicated, the Company believes the beneficial owners of the common
  shares listed below, based on information furnished by them, have sole voting
  and investment power over the number of shares listed opposite their names.

|Title of Class | Identity ofPersons or Group        | Number ofShares Owned | Percentage of Class(1)
|-------------- | ---------------------------------- | --------------------- | ----------------------
|Common Shares  | James Zahn                         | 7,200,000             | 11.4%                 
|Common Shares  | Helen Leung                        | 462,000               | 0.7%                  
|Common Shares  | Paul Xiong                         | NIL                   | NIL                   
|Common Shares  | Caillan Yu                         | 9,000,000             | 14.2%                 
|Common Shares  | Zhan International Corp.           | 20,400,000            | 32.2%                 
|Common Shares  | Ron Newport                        | 2,750,000             | 4.3%                  
|Common Shares  | Officers and Directors, as a group | 10,412,000            | 16.5%                 

(1)     Based on the 63,243,600 shares outstanding
  as of January 31, 2002.
            There are no arrangements
  known to the Company that may, at a subsequent date, result in a change in control
  of the Company.

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
            Except for:(a) the
  transactions described below; (b) the ownership of the Companys securities;
  (c) the compensation described herein, and (d) advances to and by certain officers
  to or from the Company to cover expenses, all of which were reimbursed or repaid
  without interest, none of the directors, executive officers, holders of ten
  percent of the Companys outstanding Common Shares, or any associate or
  affiliate of such person, have, to the knowledge of the Company, had a material
  interest, direct or indirect, during the two fiscal years ended January 31,
  2001 and 2000, in any transaction or proposed transaction which may materially
  affect the Company.

James
  Zahn has significant influence on Beijing Saisiai M & E Equipment Co. Ltd.)
  ("BSME"). Sales of BSME accounted for approximately 13% of the Company's sales
  in the financial year ended January 31, 2002 (year ended January 31, 2001 -
  23%). BSME also performs various services for the Company. These transactions
  are in the normal course of business and are measured at the exchange value
  (the amount of consideration established and agreed to by the related parties).

On
  February 2, 2001, the Company merged with Academy of Infrared Thermography,
  Inc., a Washington corporation, and Condition Monitoring Training Institute,
  Inc., a corporation organized pursuant to the laws of the Province of British
  Columbia. The Company issued 2,750,000 common shares to Ron Newport ("Mr. Newport"),
  the President of Academy of Infrared Thermography, Inc. and Condition Monitoring
  Training Institute, Inc. in exchange for 100% of all of the issued and outstanding
  shares of Academy of Infrared Thermography, Inc., and Condition Monitoring Training
  Institute, Inc. The 2,750,000 shares contain the following voluntary restrictions:
  1,500,000 shares are restricted for three years and the remaining 1,250,000
  shares are restricted for five years.

25

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ITEM 13.     EXHIBITS AND REPORTS
  ON FORM 8-K

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The Companys consolidated financial statements are stated
  in United States dollars and are prepared in accordance with United States Generally
  Accepted Accounting Principles. The following financial statements pertaining
  to the Company and its subsidiary are filed as part of this Annual Report.

Independent Auditors Report dated March 6, 2002

Consolidated Balance Sheets as at January 31, 2002 and 2001

Consolidated Statements of Operations for the years ended
  January 31, 2002 and 2001

Consolidated Statements of Changes in Stockholders Deficit
  for the years ended January 31, 2002 and 2001

Consolidated Statements of Cash Flows for the years ended January
  31, 2002 and 2001

Summary of Significant Accounting Policies

Notes to the Consolidated Financial Statements

26

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SIGNATURES

Pursuant
  to the requirements of Section 12 of the Securities Exchange Act of 1934, the
  registrant certifies that it meets all of the requirements for filing on Form
  10-KSB and has duly caused this annual report to be signed on its behalf by
  the undersigned, thereunto duly authorized.

|                       | CANTRONICS CORPORATION
|---------------------- | ----------------------
|                       |                       
|                       |                       
|Date:     July 4, 2002 | /s/ James Zahn        
|                       |                       
|                       | James Zahn, President 

POWER OF ATTORNEY

KNOW ALL THESE MEN BY THESE PRESENTS, that each person
  whose signature appears below constitutes and appoints James Zahn and Helen
  Leung, or any of them, his attorney-in-fact, each with the power of substitution,
  for him in any and all capacities, to sign any amendments to this Annual Report
  on Form 10-KSB, and to file the same, with exhibits thereto and other documents
  in connection therewith, with the Securities and Exchange Commission, hereby
  ratifying and confirming all that each of said attorneys-in-fact, or his substitute
  or substitutes, may do or cause to be done by virtue hereof.

Pursuant
  to the requirements of the Securities Exchange Act of 1934, this report to be
  signed by the following persons on behalf of the Registrant in the capacities
  and on the dates indicated.

|Signature       | Title                                                                                                      | Date         
|--------------- | ---------------------------------------------------------------------------------------------------------- | -------------
|                |                                                                                                            |              
|/s/ James Zahn  | President, Chief Executive
      Officer and Director
      (principal executive officer)
      James Zahn | July 31, 2002
|                |                                                                                                            |              
|/s/ Helen Leung | Treasurer and Director
      (principal financing officer)
      Helen Leung                               | July 31, 2002

27

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CANTRONICS CORPORATION (formerly Solo & Hurst, Inc.)

CONSOLIDATED FINANCIAL STATEMENTS (Stated in U.S. Dollars)

JANUARY 31, 2002





F-1

---







INDEPENDENT AUDITORS' REPORT
        
        
        To the Shareholders and the Board of Directors of 
          Cantronics Corporation 
          (formerly Solo & Hurst, Inc.)
        We have audited the accompanying consolidated balance
          sheet of Cantronics Corporation (formerly Solo & Hurst, Inc.) as
          at January 31, 2002 and the related consolidated statements of operations,
          shareholders' equity and cash flows for the year then ended. These consolidated
          financial statements are the responsibility of the Company's management.
          Our responsibility is to express an opinion on these financial statements
          based on our audit. The consolidated financial statements of the Company
          as at January 31, 2001 were audited by other auditors whose report dated
          April 7, 2001 expressed an unqualified opinion on those financial statements.
        We conducted our audit in accordance with generally
          accepted auditing standards in the United States of America. Those standards
          require that we plan and perform the audit to obtain reasonable assurance
          about whether the financial statements are free of material misstatement.
          An audit includes examining, on a test basis, evidence supporting the
          amounts and disclosures in the financial statements. An audit also includes
          assessing the accounting principles used and significant estimates made
          by management, as well as evaluating the overall financial statement
          presentation. We believe that our audit provides a reasonable basis
          for our opinion.
        In our opinion, the consolidated financial statements
          referred to above present fairly, in all material respects, the financial
          position of the Company as at January 31, 2002 and the results of its
          operations and its cash flows for the year then ended in conformity
          with accounting principles generally accepted in the United States of
          America.




|                  | "DAVIDSON & COMPANY" 
|----------------- | ---------------------
|                  |                      
|Vancouver, Canada | Chartered Accountants
|                  |                      
|March 6, 2002     |                      



A Member of SCINTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre,
  Vancouver, BC, Canada, V7Y 1G6 
  Telephone (604) 687-0947 Fax (604) 687-6172

F-2

---

|CANTRONICS CORPORATION       
|-----------------------------
|(formerly Solo & Hurst, Inc.)
|CONSOLIDATED BALANCE SHEET   
|(Stated in U.S. Dollars)     
|AS AT JANUARY 31             
|                             
|                             
|                             

|                                     |   | 2002      |  |   | 2001    | 
|------------------------------------ | - | --------- |  | - | ------- | 
|                                     |   |           |  |   |         | 
|                                     |   |           |  |   |         | 
|                                     |   |           |  |   |         | 
|ASSETS                               |   |           |  |   |         | 
|                                     |   |           |  |   |         | 
|Current                              |   |           |  |   |         | 
|Cash                                 | $ | 236,139   |  | $ | 86,035  | 
|Short-term deposits                  |   | -         |  |   | 185,189 | 
|Marketable securities (Note
      4) |   | -         |  |   | 242,078 | 
|Accounts receivable                  |   | 425,287   |  |   | 98,386  | 
|Inventory                            |   | 210,354   |  |   | 145,843 | 
|Prepaid expenses                     |   | 21,426    |  |   | 2,001   | 
|                                     |   |           |  |   |         | 
|Total current assets                 |   | 893,206   |  |   | 759,532 | 
|                                     |   |           |  |   |         | 
|Property and equipment(Note 5)       |   | 187,818   |  |   | 63,037  | 
|                                     |   |           |  |   |         | 
|Investment(Note 6)                   |   | 172,737   |  |   | -       | 
|                                     |   |           |  |   |         | 
|Deferred income taxes(Note 7)        |   | 12,957    |  |   | 29,041  | 
|                                     |   |           |  |   |         | 
|Due from related parties(Note 8)     |   | 163,021   |  |   | -       | 
|                                     |   |           |  |   |         | 
|Total assets                         | $ | 1,429,739 |  | $ | 851,610 | 
|                                     |   |           |  |   |         | 





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

F-3

---

|CANTRONICS CORPORATION        |  |      |  |  |      | 
|----------------------------- |  | ---- |  |  | ---- | 
|(formerly Solo & Hurst, Inc.) |  |      |  |  |      | 
|CONSOLIDATED BALANCE SHEET    |  |      |  |  |      | 
|(Stated in U.S. Dollars)      |  |      |  |  |      | 
|AS AT JANUARY 31              |  |      |  |  |      | 
|                              |  |      |  |  |      | 
|                              |  |      |  |  |      | 
|                              |  |      |  |  |      | 
|                              |  | 2002 |  |  | 2001 | 
|                              |  |      |  |  |      | 

Continued

|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)                       |   |           |  |   |         |  
|----------------------------------------------------------------------- | - | --------- |  | - | ------- | -
|                                                                        |   |           |  |   |         |  
|Current liabilities                                                     |   |           |  |   |         |  
|Accounts payable                                                        | $ | 440,604   |  | $ | 170,193 |  
|Accrued liabilities                                                     |   | 52,463    |  |   | 55,272  |  
|Customer deposits                                                       |   | 213,092   |  |   | 383,240 |  
|Due to related parties (Note 8)                                         |   | 26,298    |  |   | 281,826 |  
|                                                                        |   |           |  |   |         |  
|Total current liabilities                                               |   | 732,457   |  |   | 890,531 |  
|                                                                        |   |           |  |   |         |  
|Commitments(Note 11)                                                    |   |           |  |   |         |  
|                                                                        |   |           |  |   |         |  
|Stockholders' equity (deficiency)                                       |   |           |  |   |         |  
|Common stock (Note 9)                                                   |   |           |  |   |         |  
|Authorized                                                              |   |           |  |   |         |  
|5,000,000
      preferred shares with a par value of $ 0.001            |   |           |  |   |         |  
|90,000,000
      common shares with a par value of $ 0.001              |   |           |  |   |         |  
|Issued                                                                  |   |           |  |   |         |  
|63,243,600
      common shares (January 31, 2001  60,000,000)          |   | 63,244    |  |   | 60,000  |  
|Additional paid-in capital (Distributions
      in excess of par value) |   | 599,993   |  |   | (59,865 | )
|Retained earnings (deficit)                                             |   | 23,435    |  |   | (54,213 | )
|Accumulated other comprehensive income                                  |   | 10,610    |  |   | 15,157  |  
|                                                                        |   |           |  |   |         |  
|Total shareholders' equity (deficiency)                                 |   | 697,282   |  |   | (38,921 | )
|                                                                        |   |           |  |   |         |  
|Total liabilities and stockholders' equity                              | $ | 1,429,739 |  | $ | 851,610 |  
|                                                                        |   |           |  |   |         |  

Nature and continuance of operations (Note 1)





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

F-4

---

|CANTRONICS CORPORATION               |  |      |  |  |      | 
|------------------------------------ |  | ---- |  |  | ---- | 
|(formerly Solo & Hurst, Inc.)        |  |      |  |  |      | 
|CONSOLIDATED STATEMENT OF OPERATIONS |  |      |  |  |      | 
|(Stated in U.S. Dollars)             |  |      |  |  |      | 
|YEAR ENDED JANUARY 31                |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  | 2002 |  |  | 2001 | 
|                                     |  |      |  |  |      | 

|SALES                                  |  | 3,138,066  |   |  | 1,113,392 |  
|-------------------------------------- |  | ---------- | - |  | --------- | -
|                                       |  |            |   |  |           |  
|COST OF SALES                          |  | (2,034,276 | ) |  | (785,897  | )
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|GROSS PROFIT                           |  | 1,103,790  |   |  | 327,495   |  
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|EXPENSES                               |  |            |   |  |           |  
|Advertising and promotion              |  | 117,125    |   |  | 2,699     |  
|Amortization of property and equipment |  | 39,516     |   |  | 18,230    |  
|Bank charges and interest              |  | 18,730     |   |  | -         |  
|Consulting                             |  | 8,837      |   |  | -         |  
|Office and miscellaneous               |  | 82,189     |   |  | 23,997    |  
|Professional fees                      |  | 84,998     |   |  | 72,218    |  
|Rent                                   |  | 60,955     |   |  | 27,378    |  
|Research and development (Note 10)     |  | 102,671    |   |  | 56,315    |  
|Telephone and utilities                |  | 37,928     |   |  | -         |  
|Travel and business development        |  | 117,630    |   |  | 15,690    |  
|Vehicle                                |  | 14,020     |   |  | -         |  
|Wages and employee benefits            |  | 347,914    |   |  | 89,476    |  
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|                                       |  | 1,032,513  |   |  | 306,003   |  
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|Income before other items              |  | 71,277     |   |  | 21,492    |  
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|Other income (expenses)                |  |            |   |  |           |  
|Loss on sale of assets                 |  | (13,120    | ) |  | -         |  
|Realized gain on sale of securities    |  | 17,277     |   |  | 13,604    |  
|Interest and other                     |  | 23,383     |   |  | -         |  
|Foreign exchange gain                  |  | 11,767     |   |  | -         |  
|                                       |  |            |   |  |           |  
|                                       |  |            |   |  |           |  
|                                       |  | 39,307     |   |  | 13,604    |  
|                                       |  |            |   |  |           |  

- continued -



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

F-5

---

|CANTRONICS CORPORATION               |  |      |  |  |      | 
|------------------------------------ |  | ---- |  |  | ---- | 
|(formerly Solo & Hurst, Inc.)        |  |      |  |  |      | 
|CONSOLIDATED STATEMENT OF OPERATIONS |  |      |  |  |      | 
|(Stated in U.S. Dollars)             |  |      |  |  |      | 
|YEAR ENDED JANUARY 31                |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  | 2002 |  |  | 2001 | 
|                                     |  |      |  |  |      | 

Continued

|Income from continuing operations before income taxes |   | 110,584    |   |   | 35,096     | 
|----------------------------------------------------- | - | ---------- | - | - | ---------- | 
|                                                      |   |            |   |   |            | 
|Income tax (expense) recovery                         |   |            |   |   |            | 
|Current                                               |   | (2,398     | ) |   | -          | 
|Deferred                                              |   | (30,538    | ) |   | 12,145     | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|                                                      |   | (32,936    | ) |   | 12,145     | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|Net income for the year                               | $ | 77,648     |   | $ | 47,241     | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|Basic and diluted earnings per share                  | $ | 0.01       |   | $ | 0.01       | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|                                                      |   |            |   |   |            | 
|Basic and diluted weighted average shares outstanding |   | 63,178,312 |   |   | 59,117,808 | 
|                                                      |   |            |   |   |            | 





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

F-6

---

|CANTRONICS CORPORATION                                             
|-------------------------------------------------------------------
|(formerly Solo & Hurst, Inc.)                                      
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
|(Stated in U.S. Dollars)                                           
|                                                                   

|                              |  |              |  |   |                |  |   | Additional      |   |   |              |   |   |               |   |   |              |  
|----------------------------- |  | ------------ |  | - | -------------- |  | - | --------------- | - | - | ------------ | - | - | ------------- | - | - | ------------ | -
|                              |  |              |  |   |                |  |   | Paid-in Capital |   |   | Retained     |   |   | Accumulated   |   |   | Total        |  
|                              |  | Common Stock |  |   | (Distributions |  |   | Earnings        |   |   | Other        |   |   | Stockholders |  
|                              |  |              |  |   |                |  |   | in Excess       |   |   | (Accumulated |   |   | Comprehensive |   |   | Equity       |  
|                              |  | Shares       |  |   | Amount         |  |   | of Par Value)   |   |   | Deficit)     |   |   | Income (Loss) |   |   | (Deficiency) |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Balance, January 21, 2000     |  | 59,000,000   |  | $ | 59,000         |  | $ | (58,865         | ) | $ | (101,454     | ) | $ | (3,137        | ) | $ | (104,456     | )
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Adjustment for the            |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|stockholder's equity of the   |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Company at the acquisition    |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Date (Note 3a)                |  | 1,000,000    |  |   | 1,000          |  |   | (1,000          | ) |   | -            |   |   | -             |   |   | -            |  
|Net income for the year       |  | -            |  |   | -              |  |   | -               |   |   | 47,241       |   |   | -             |   |   | 47,241       |  
|Foreign exchange translation  |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|adjustment                    |  | -            |  |   | -              |  |   | -               |   |   | -            |   |   | 275           |   |   | 275          |  
|Unrealized gains on available |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|for sale securities (net of   |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|$5,231 of deferred income     |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|taxes)                        |  | -            |  |   | -              |  |   | -               |   |   | -            |   |   | 18,019        |   |   | 18,019       |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Balance, January 31, 2001     |  | 60,000,000   |  |   | 60,000         |  |   | (59,865         | ) |   | (54,213      | ) |   | 15,157        |   |   | (38,921      | )
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Issuance of common            |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|stock for:                    |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Acquisition (Note 3b)         |  | 2,750,000    |  |   | 2,750          |  |   | 346,327         |   |   | -            |   |   | -             |   |   | 349,077      |  
|Cash (Note 9)                 |  | 418,600      |  |   | 419            |  |   | 313,531         |   |   | -            |   |   | -             |   |   | 313,950      |  
|Services (Note 3a)            |  | 75,000       |  |   | 75             |  |   | -               |   |   | -            |   |   | -             |   |   | 75           |  
|Net income for the year       |  | -            |  |   | -              |  |   | -               |   |   | 77,648       |   |   | -             |   |   | 77,648       |  
|Reclassification adjustment,  |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|net of tax                    |  | -            |  |   | -              |  |   | -               |   |   | -            |   |   | (18,019       | ) |   | (18,019      | )
|Foreign exchange translation  |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|adjustment                    |  | -            |  |   | -              |  |   | -               |   |   | -            |   |   | 13,472        |   |   | 13,472       |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  
|Balance, January 31, 2002     |  | 63,243,600   |  | $ | 63,244         |  | $ | 599,993         |   | $ | 23,435       |   | $ | 10,610        |   | $ | 697,282      |  
|                              |  |              |  |   |                |  |   |                 |   |   |              |   |   |               |   |   |              |  





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

F-7

---

|CANTRONICS CORPORATION               |  |      |  |  |      | 
|------------------------------------ |  | ---- |  |  | ---- | 
|(formerly Solo & Hurst, Inc.)        |  |      |  |  |      | 
|CONSOLIDATED STATEMENT OF CASH FLOWS |  |      |  |  |      | 
|(Stated in U.S. Dollars)             |  |      |  |  |      | 
|YEAR ENDED JANUARY 31                |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  | 2002 |  |  | 2001 | 
|                                     |  |      |  |  |      | 

|CASH FLOWS FROM OPERATING ACTIVITIES                       |   |          |   |   |          |  
|---------------------------------------------------------- | - | -------- | - | - | -------- | -
|Net income for the year                                    | $ | 77,648   |   | $ | 47,241   |  
|Adjustments to reconcile
      net income for the year to  |   |          |   |   |          |  
|net cash
      provided by (used in) operating activities: |   |          |   |   |          |  
|Amortization
      of property and equipment               |   | 39,516   |   |   | 18,230   |  
|Deferred
      income taxes (recovery)                     |   | 30,538   |   |   | (12,145  | )
|Gain
      on sale of marketable securities                |   | (17,277  | ) |   | (13,604  | )
|Loss
      on sale of assets                               |   | 13,120   |   |   | 2,749    |  
|Common
      stock issued for services                     |   | 75       |   |   | -        |  
|                                                           |   |          |   |   |          |  
|Changes in non-cash working
      capital items:           |   |          |   |   |          |  
|(Increase)
      decrease in accounts receivable           |   | (205,184 | ) |   | 259,318  |  
|Increase
      in inventory                                |   | (24,934  | ) |   | (146,720 | )
|Increase
      in prepaid expenses                         |   | (14,425  | ) |   | (2,014   | )
|Increase
      (decrease) in accounts payable              |   | 230,600  |   |   | (184,503 | )
|Increase
      in accrued liabilities                      |   | 1,061    |   |   | 48,640   |  
|Increase
      (decrease) in customer deposits             |   | (200,226 | ) |   | 138,859  |  
|                                                           |   |          |   |   |          |  
|                                                           |   |          |   |   |          |  
|Net cash provided by (used
      in) operating activities  |   | (69,488  | ) |   | 156,051  |  
|                                                           |   |          |   |   |          |  
|                                                           |   |          |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                       |   |          |   |   |          |  
|Purchase of property and
      equipment                   |   | (35,049  | ) |   | (34,720  | )
|Cash acquired on acquisition                               |   | 91,825   |   |   | -        |  
|Proceeds on sale of available-for-sale
      securities    |   | 259,355  |   |   | 152,360  |  
|Purchase of available-for-sale
      securities            |   | -        |   |   | (358,899 | )
|Proceeds on sale of property
      and equipment           |   | -        |   |   | 2,483    |  
|Purchase of investment                                     |   | (172,737 | ) |   | -        |  
|                                                           |   |          |   |   |          |  
|                                                           |   |          |   |   |          |  
|Net cash provided by (used
      in) investing activities  |   | 143,394  |   |   | (238,776 | )
|                                                           |   |          |   |   |          |  

- continued -





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

F-8

---

|CANTRONICS CORPORATION               |  |      |  |  |      | 
|------------------------------------ |  | ---- |  |  | ---- | 
|(formerly Solo & Hurst, Inc.)        |  |      |  |  |      | 
|CONSOLIDATED STATEMENT OF CASH FLOWS |  |      |  |  |      | 
|(Stated in U.S. Dollars)             |  |      |  |  |      | 
|YEAR ENDED JANUARY 31                |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  |      |  |  |      | 
|                                     |  | 2002 |  |  | 2001 | 
|                                     |  |      |  |  |      | 

Continued

|CASH FLOWS FROM FINANCING ACTIVITIES                          |   |          |   |   |         |  
|------------------------------------------------------------- | - | -------- | - | - | ------- | -
|Proceeds from issuance of
      common stock                  |   | 313,950  |   |   | -       |  
|Repayment of advances from
      related parties              |   | -        |   |   | (31,240 | )
|Bank overdraft                                                |   | -        |   |   | (19,033 | )
|Advances to related parties                                   |   | (418,552 | ) |   | 60,812  |  
|                                                              |   |          |   |   |         |  
|Net cash provided by (used
      in) financing activities     |   | (104,602 | ) |   | 10,539  |  
|                                                              |   |          |   |   |         |  
|Decrease in cash and cash equivalents                         |   | (30,696  | ) |   | (72,186 | )
|                                                              |   |          |   |   |         |  
|Effect of foreign exchange on cash and
      cash equivalents |   | (4,389   | ) |   | (20,125 | )
|                                                              |   |          |   |   |         |  
|Cash and cash equivalents, beginning of
      year            |   | 271,224  |   |   | 363,535 |  
|                                                              |   |          |   |   |         |  
|                                                              |   |          |   |   |         |  
|Cash and cash equivalents, end of year                        | $ | 236,139  |   | $ | 271,224 |  
|                                                              |   |          |   |   |         |  
|                                                              |   |          |   |   |         |  
|                                                              |   |          |   |   |         |  
|Cash and cash equivalents represented by:                     |   |          |   |   |         |  
|Cash                                                          | $ | 236,139  |   | $ | 86,035  |  
|Short term deposits                                           |   | -        |   |   | 185,189 |  
|                                                              |   |          |   |   |         |  
|                                                              |   |          |   |   |         |  
|                                                              | $ | 236,139  |   | $ | 271,224 |  
|                                                              |   |          |   |   |         |  

Supplemental disclosure with respect to cash flows (Note 14)





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

F-9

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|1. | NATURE AND CONTINUANCE OF OPERATIONS
      The Company was incorporated under the laws of the State
        of Nevada and its principal business activities consist of manufacturing,
        distributing and providing training on electro-optics and condition monitoring
        equipment for industrial facilities. On December 18, 2000 the Company
        changed its name from Solo & Hurst, Inc. to Cantronics Corporation.
      Effective December 18, 2000, the Company issued 59,000,000
        common shares to acquire the only issued and outstanding share of Cantronic
        Systems Inc. (Cantronic) a British Columbia, Canada company
        incorporated on February 28, 1997. As a result of this transaction, the
        former shareholders of Cantronic acquired control over a majority of the
        shares of the Company. Accordingly, the transaction has been treated for
        accounting purposes as a recapitalization of the Company and, therefore,
        these financial statements represent a continuation of the legal subsidiary,
        Cantronic, not the Company, as the legal parent (Note 3a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | SIGNIFICANT ACCOUNTING POLICIES
      These financial statements have been prepared in conformity
        with generally accepted accounting principles in the United States of
        America. The significant accounting policies adopted by the Company are
        as follows:
      Use of estimates
      The preparation of financial statements in conformity
        with generally accepted accounting principles in the United States of
        America requires management to make estimates and assumptions that affect
        the reported amount of assets and liabilities and disclosure of contingent
        liabilities at the date of the financial statements and the reported amount
        of expenses during the period. Actual results could differ from those
        reported.
      Principles of consolidation
      These consolidated financial statements include the
        accounts of the Company and its wholly-owned subsidiaries, Cantronic,
        Condition Monitoring Training Institute, Inc. (CMTI) and Academy
        of Infrared Thermography, Inc. (AIRT). Cantronic and CMTI
        are British Columbia companies and AIRT is a Washington State company.
        All significant inter-company balances and transactions have been eliminated.
      Cash equivalents
      The Company considers all cash and highly liquid investments
        with maturities of three months or less when purchased to be cash equivalents.
      Marketable securities
      Available-for-sale securities are carried at fair market
        value with unrealized holding gains and losses included in a separate
        component of stockholder's equity (deficiency). Realized gains and losses
        are determined on an average costs basis when securities are sold.

F-10

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES (cont'd)
      Inventory
      Inventory, consisting of finished goods purchased for
        resale and raw materials, is stated at the lower of cost and net realizable
        value. Cost is generally determined on the first-in, first-out basis.
      Property and equipment
      Property and equipment are recorded at cost less accumulated
        amortization. Amortization is recorded on a declining balance basis at
        the following annual rates:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Automotive equipment    | 30% | 
| | ----------------------- | --- | 
| | Building                | 4%  | 
| | Computer equipment      | 30% | 
| | Demonstration equipment | 20% | 
| | Furniture and fixtures  | 20% | 
| | Training equipment      | 20% | 

| | Leasehold improvements are amortized over the remaining
        term of the underlying premises lease which approximates its estimated
        useful life.
      Investment
      The investment has been stated at cost, unless there
        has been an other than temporary decline in value at which time the investment
        is written-down and the unrealized loss is recognized in the determination
        of net income. Dividends received that are distributed from the net accumulated
        earnings of the investee are recognized as income.
      Revenue recognition
      Revenue is recognized on the sale of goods upon shipment
        to customers which is when title to the goods passes. Revenue is recognized
        on training activities upon completion of the training.
      Advertising
      The Company follows the provisions of Statement of Position
        93-7 in accounting for the costs of advertising. Advertising costs are
        charged to expense in the period incurred.
      Research and development
      Research and development costs, which include the cost
        of materials and services consumed and salaries and wages of personnel
        directly engaged in research and development, are expensed as incurred.
        Research and development costs are reduced by related government assistance
        in the year received.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES (cont'd)
      Financial instruments
      The Company's financial instruments consist of cash
        and cash equivalents, accounts receivable, due from related parties, accounts
        payable, accrued liabilities, customer deposits and due to related parties.
        Unless otherwise noted, it is management's opinion that the Company is
        not exposed to significant interest, currency or credit risks arising
        from these financial instruments. The fair value of these financial instruments
        approximate their carrying values, unless otherwise noted.
      Foreign currency translation
      The Company's operations are substantially through a
        Canadian subsidiary whose functional currency is the Canadian dollar.
        These consolidated financial statements are stated in US dollars for comparison
        purposes with other industry competitors registered with the Securities
        and Exchange Commission ("SEC") in the United States. Assets and liabilities
        denominated in Canadian dollars are translated to US dollars using the
        exchange rate in effect at the year end date. Revenue and expenses are
        translated to US dollars using the average rate of exchange for the respective
        period. Gains and losses on exchange are recorded as comprehensive income
        (loss) and are reported separately in stockholders' equity (deficiency).
      The Company also conducts transactions in currencies
        other than the Canadian dollar. These amounts are translated as follows:
        Transactions are translated at the rate in effect on the transaction date.
        Monetary assets and liabilities denominated in foreign currencies are
        then translated using the rate in effect at the year end date. The resulting
        gain or loss from foreign currency transactions is charged to the consolidated
        statement of operations.
      Income taxes
      Future income taxes are recorded using the asset and
        liability method. Under the asset and liability method, future tax assets
        and liabilities are recognized for the future tax consequences attributable
        to differences between the financial statement carrying amounts of existing
        assets and liabilities and their respective tax bases. Future tax assets
        and liabilities are measured using the enacted or substantively enacted
        tax rates expected to apply when the asset is realized or the liability
        settled. The effect on future tax assets and liabilities of a change in
        tax rates is recognized in income in the period that substantive enactment
        or enactment occurs. To the extent that the Company does not consider
        it more likely than not that a future tax asset will be recovered, it
        provides a valuation allowance against the excess.
      Earnings per share
      Basic earnings per share is based on the weighted average number of
        common shares outstanding during the year.
      Diluted earnings per share considers the dilutive impact
        of the conversion of outstanding stock options and warrants as if the
        events had occurred at the beginning of the year. For the years ended
        January 31, 2002 and 2001, there were no stock options or warrants granted
        or outstanding.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-12

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES (cont'd)
      New accounting pronouncements
      In June, 2001, the Financial Accounting Standards Board
        ("FASB") approved the issuance of Statement of Financial Accounting Standards
        No. 141, "Business Combinations" ("SFAS 141") and Statement of Financial
        Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
        142"). SFAS 141 requires that all business combinations be accounted for
        using the purchase method of accounting making the use of the pooling-of-interest
        method prohibited. This statement also establishes criteria for separate
        recognition of intangible assets acquired in a purchase business combination.
        SFAS 141 is effective for business combinations completed after June 30,
        2001. SFAS 142 requires that goodwill no longer be amortized to earnings,
        but instead be reviewed for impairment. The statement is effective for
        fiscal years beginning after December 15, 2001, and is required to be
        applied at the beginning of an entity's fiscal year and to be applied
        to all goodwill and other intangible assets recognized in its financial
        statements at that date. Impairment losses for goodwill and indefinite-lived
        intangible assets that arise due to the initial application of this statement
        (resulting from a transitional impairment test) are to be reported as
        resulting from a change in accounting principle. Under an exception to
        the date at which this statement becomes effective, goodwill and intangible
        assets acquired after June 30, 2001, will be subject immediately to the
        non-amortization and amortization provisions of this statement.
      In July 2001, FASB issued Statement of Financial Accounting
        Standards No. 143 "Accounting for Asset Retirement Obligations" ("SFAS
        143") that records the fair value of the liability for closure and removal
        costs associated with the legal obligations upon retirement or removal
        of any tangible long-lived assets. The initial recognition of the liability
        will be capitalized as part of the asset cost and depreciated over its
        estimated useful life. SFAS 143 is required to be adopted effective January
        1, 2003.
      In October 2001, FASB issued Statement of Financial
        Accounting Standards No. 144, "Accounting for the Impairment on Disposal
        of Long-lived Assets" ("SFAS 144"), which supersedes Statement of Financial
        Accounting Standards No. 121, "Accounting for the Impairment of Long-lived
        Assets and for Long-lived Assets to be Disposed of". SFAS 144 requires
        that long-lived assets that are to be disposed of by sale be measured
        at the lower of book value or fair value less cost to sell. Additionally,
        SFAS 144 expands the scope of discontinued operations to include all components
        of an entity with operations that (1) can be distinguished from the rest
        of the entity and (2) will be eliminated from the ongoing operations of
        the entity in a disposal transaction. SFAS 144 is effective for financial
        statements issued for fiscal years beginning after December 15, 2001,
        and, generally, its provisions are to be applied prospectively.
      The adoption of these new pronouncements is not expected to have a material
        effect on the Company's financial position or results of operations.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3. | ACQUISITIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-13

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|3. | ACQUISITIONS
|-- | ------------
|   |             
|   | a)          
|   |             
|   | b)          

| |                                  |   |         |  
| | -------------------------------- | - | ------- | -
| |                                  |   |         |  
| | Purchase price                   |   |         |  
| | 2,750,000 shares of common stock | $ | 349,077 |  
| |                                  |   |         |  
| |                                  |   |         |  
| | Net assets acquired              |   |         |  
| | Assets                           |   | 415,172 |  
| | Liabilities                      |   | (66,095 | )
| |                                  |   |         |  
| |                                  |   |         |  
| |                                  | $ | 349,077 |  
| |                                  |   |         |  

F-14

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|4. | SHORT-TERM INVESTMENTS
      Short-term investments consisted of available-for-sale equity securities
        and are summarized as follows:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------

| |                        |   |      |  |   |         | 
| | ---------------------- | - | ---- |  | - | ------- | 
| |                        |   |      |  |   |         | 
| |                        |   | 2002 |  |   | 2001    | 
| |                        |   |      |  |   |         | 
| |                        |   |      |  |   |         | 
| | Cost                   | $ | -    |  | $ | 218,828 | 
| | Gross unrealized gains |   | -    |  |   | 23,250  | 
| |                        |   |      |  |   |         | 
| |                        |   |      |  |   |         | 
| | Market value           | $ | -    |  | $ | 242,078 | 
| |                        |   |      |  |   |         | 

|5. | PROPERTY AND EQUIPMENT
|-- | ----------------------

| |                        |      |         |      |  
| | ---------------------- | ---- | ------- | ---- | -
| |                        |      |         |      |  
| |                        | 2002 |         | 2001 |  
| |                        |      |         |      |  
| |                        |      |         |      |  
| |                        |      |         |      |  
| |                        |      | Cost    |      |  
| |                        |      |         |      |  
| |                        |      |         |      |  
| | Automotive equipment   | $    | 16,073  |      | $
| | Building               |      | 26,770  |      |  
| | Computer equipment     |      | 38,119  |      |  
| | Demonstration          |      |         |      |  
| | equipment              |      | 68,269  |      |  
| | Furniture and fixtures |      | 24,831  |      |  
| | Land                   |      | 34,030  |      |  
| | Leasehold              |      |         |      |  
| | improvements           |      | 4,677   |      |  
| | Training equipment     |      | 42,906  |      |  
| |                        |      |         |      |  
| |                        |      |         |      |  
| |                        | $    | 255,675 |      | $
| |                        |      |         |      |  

|6. | INVESTMENT
      During the current year, the Company acquired a 19% interest
        in a joint venture limited liability company located in Jiaxing, China
        for consideration of $172,737.
      The production and business scope of the joint venture
        company is to research and manufacture environmental protection products,
        electronic products and integrated optical-mechanical-electrical products
        as well as to conduct the development and construction of infrastructure
        for an industrial park.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|7. | INCOME TAXES
|-- | ------------
|   |             
|   | a)          

| |                                                                          |   |         |   |   |         |  
| | ------------------------------------------------------------------------ | - | ------- | - | - | ------- | -
| |                                                                          |   |         |   |   |         |  
| |                                                                          |   | 2002    |   |   | 2001    |  
| |                                                                          |   |         |   |   |         |  
| |                                                                          |   |         |   |   |         |  
| | Income before income taxes                                               | $ | 110,584 |   | $ | 35,096  |  
| |                                                                          |   |         |   |   |         |  
| |                                                                          |   |         |   |   |         |  
| | Income taxes at statutory rates                                          | $ | 47,209  |   | $ | 16,344  |  
| | Permanent differences                                                    |   | (4,771  | ) |   | 1,543   |  
| | Temporary differences                                                    |   | (5,437  | ) |   | -       |  
| | Small business rate deduction                                            |   | -       |   |   | (8,224  | )
| | Effect of restatement of deferred income tax assets for
      changes in |   |         |   |   |         |  
| | Canadian tax rates expected in future
      periods                      |   | (4,065  | ) |   | (21,808 | )
| |                                                                          |   |         |   |   |         |  
| |                                                                          |   |         |   |   |         |  
| | Total income taxes (recovery)                                            | $ | 32,936  |   | $ | (12,145 | )
| |                                                                          |   |         |   |   |         |  

| | b) | Significant components of the Company's deferred income tax assets and
      liabilities at January 31 are as follows:
| | -- | ----------------------------------------------------------------------------------------------------------------------

| |                        |   |        |  |   |         |  
| | ---------------------- | - | ------ |  | - | ------- | -
| |                        |   |        |  |   |         |  
| |                        |   | 2002   |  |   | 2001    |  
| |                        |   |        |  |   |         |  
| |                        |   |        |  |   |         |  
| |                        |   |        |  |   |         |  
| | Tax loss carryforwards | $ | -      |  |   | 37,684  |  
| | Property and equipment |   | 12,957 |  |   | 6,946   |  
| | Investments            |   | -      |  |   | (5,231  | )
| | Investment tax credit  |   | -      |  |   | (10,358 | )
| |                        |   |        |  |   |         |  
| |                        |   |        |  |   |         |  
| |                        | $ | 12,957 |  | $ | 29,041  |  
| |                        |   |        |  |   |         |  

| | The Company evaluates its valuation allowance requirements
        based on projected future operations. When circumstances change and this
        causes a change in management's judgement about the recoverability of
        deferred tax assets, the impact of the change on the valuation allowance
        is reflected in current income. No valuation allowance has been recognized
        in these consolidated financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-16

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|8. | RELATED PARTY TRANSACTIONS
      During the year ended January 31, 2002 and 2001, the following transactions
        occurred:
|-- | ------------------------------------------------------------------------------------------------------------------------------

| |                                                                                   |   |         |  |   |         | 
| | --------------------------------------------------------------------------------- | - | ------- |  | - | ------- | 
| |                                                                                   |   |         |  |   |         | 
| |                                                                                   |   | 2002    |  |   | 2001    | 
| |                                                                                   |   |         |  |   |         | 
| |                                                                                   |   |         |  |   |         | 
| | Sales to Beijing Saisiai M & E Equipment Co. Ltd.,
      (BSME, a foreign       |   |         |  |   |         | 
| | company significantly influenced by a
      director of the Company).             | $ | 408,047 |  | $ | 254,301 | 
| |                                                                                   |   |         |  |   |         | 
| | Engineering, technical, marketing and other services paid
      or payable to     |   |         |  |   |         | 
| | BSME.                                                                             |   | 402,169 |  |   | 146,901 | 
| |                                                                                   |   |         |  |   |         | 
| | Sales to Shanghai Saisiai Scientific Instrument Co. Ltd.
      ("SSSI", a foreign |   |         |  |   |         | 
| | company significantly influenced by a
      director of the Company).             |   | 26,992  |  |   | 28,190  | 
| |                                                                                   |   |         |  |   |         | 

| | These transactions were in the normal course of operations
        and were measured at the exchange value which represented the amount of
        consideration established and agreed to by the related parties. BSME performs
        various services for the Company. Additionally, the Company sells its
        products to BSME. Pursuant to an agreement dated February 1, 1999, cancellable
        at any time on sixty days notice, the Company sells products to BSME at
        a price equal to the Companys cost plus 7.5%.
      The following transactions were not in the normal course
        of operations and were measured at their carrying value which represented
        the amount of consideration established and agreed to by the related parties:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                 |   |      |  |   |        | 
| | ------------------------------------------------------------------------------- | - | ---- |  | - | ------ | 
| |                                                                                 |   |      |  |   |        | 
| |                                                                                 |   | 2002 |  |   | 2001   | 
| |                                                                                 |   |      |  |   |        | 
| |                                                                                 |   |      |  |   |        | 
| | Assumption of amount due to CSI Industrial Systems Ltd.
      ("CSI", a company |   |      |  |   |        | 
| | controlled by a director of the Company).                                       | $ | -    |  | $ | 6,855  | 
| | Purchase of property and equipment from CSI.                                    |   | -    |  |   | 6,712  | 
| | Sale of property and equipment to a director of the Company.                    |   | -    |  |   | 16,779 | 
| |                                                                                 |   |      |  |   |        | 

| | Included in due from related parties at January 31,
        2002 is $163,021 (2001 - $Nil) due from directors and shareholders of
        the Company.
      Included in due to related parties at January 31, 2002
        is $26,298 (2001 - $281,826) due to directors of the Company.
      Included in accounts receivable at January 31, 2002
        is $209,900 (2001 - $55,804) due from BSME and $52,920 (2001 - $28,190)
        due from SSSI.
      Included in accounts payable at January 31, 2002 is
        $20,207 (2001 - $Nil) due to BSME and $12,953 (2001 - $Nil) due to other
        companies which are controlled by senior manager of the Company.
      Amounts due to and from directors and related parties
        are non-interest bearing, unsecured and with no specified terms of repayment.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-17

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|9.  | COMMON STOCK
      Common shares
      The issued and outstanding common shares entitle holders
        to vote and to receive dividends when declared. In the event of the Company's
        liquidation, dissolution or winding up, shareholders are entitled to participate
        equally with respect to any distribution of net assets or any dividends
        which may be declared.
      On January 31, 2001 the Company split its common stock
        on a one-to-twenty basis. All references in these financial statements
        to the number of shares are stated on a post-split basis. Per share amounts
        have been restated for the stock split.
      During the year ended January 31, 2002 the Company issued
        418,600 shares of common stock for cash proceeds of $313,950 pursuant
        to a private placement.
      Additional paid-in capital
      The excess of proceeds received for shares of common
        stock over their par value of $0.001 per share is credited to additional
        paid-in capital.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10. | RESEARCH AND DEVELOPMENT
      The Company expensed the following research and development costs net
        of grants received:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                   |   |         |   |   |         |  
| | ----------------- | - | ------- | - | - | ------- | -
| |                   |   |         |   |   |         |  
| |                   |   | 2002    |   |   | 2001    |  
| |                   |   |         |   |   |         |  
| |                   |   |         |   |   |         |  
| | Salaries          | $ | 41,089  |   | $ | 25,663  |  
| | Materials         |   | 66,628  |   |   | 44,534  |  
| | Government grants |   | (5,046  | ) |   | (13,882 | )
| |                   |   |         |   |   |         |  
| |                   |   |         |   |   |         |  
| |                   | $ | 102,671 |   | $ | 56,315  |  
| |                   |   |         |   |   |         |  

|11. | COMMITMENTS
      Minimum future annual aggregate payments for office facilities and equipment
        leased by the Company are as follows:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 2003 |  | $ | 73,224 | 
| | ---- |  | - | ------ | 
| | 2004 |  |   | 34,108 | 
| | 2005 |  |   | 5,654  | 

F-18

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|12. | SALES AND CREDIT CONCENTRATION
      The Company is exposed to credit losses in the event
        of non-performance by the counterparties to the financial instruments,
        but does not expect any counterparties to fail to meet their obligations.
        The Company generally does not obtain collateral or other security to
        support financial instruments subject to credit risk but monitors the
        credit standing of counterparties.
      Pursuant to sales contracts, approximately 48% of total
        revenue for the year ended January 31, 2002 is derived from four customers,
        individually representing 28%, 7%, 7% and 6% of revenue.
      Pursuant to sales contracts, approximately 74% of total
        revenue for the year ended January 31, 2001 was derived from four customers
        individually representing 30%, 23%, 11% and 10% of revenue.
      Accounts receivable (due in U.S. dollars and French
        francs) from these customers at the year ended January 31, 2002 is $Nil
        (2001 - $55,804).
      As at January 31, 2002, approximately 61% (2001 
        85%) of accounts receivable is due from two related parties, individually
        representing 49% (2001  57%) and 12% (2001  28%).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|13. | SEGMENTED INFORMATION
      During the years ended January 31, 2002 and 2001, the
        Company manufactured, distributed and provided training on electro-optics
        and condition monitoring equipment. During the year ended January 31,
        2002 the Company also began providing training on infrared radiometrics
        and thermal imaging. The Company determined that it operates in one reporting
        segment.
      During the year ended January 31, 2001, sales of industrial
        electro-optics and condition monitoring equipment were made to customers
        substantially located in Asia. During the year ended January 31, 2002,
        sales of industrial electro-optics, condition monitoring equipment and
        training seminars were made in the following geographical locations:                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |               |   |           | 
| | ------------- | - | --------- | 
| |               |   |           | 
| | Sales         |   |           | 
| | Asia          | $ | 2,145,578 | 
| | United States |   | 617,726   | 
| | Canada        |   | 267,482   | 
| | Other         |   | 107,280   | 
| |               |   |           | 
| |               |   |           | 
| |               | $ | 3,138,066 | 
| |               |   |           | 

| | The majority of the Companys consolidated assets are located and
      maintained within Canada.
| | -------------------------------------------------------------------------------------------------

F-19

---

|CANTRONICS CORPORATION                        
|----------------------------------------------
|(formerly Solo & Hurst, Inc.)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Stated in U.S. Dollars)                      
|JANUARY 31, 2002                              
|                                              

|14. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
      Significant non-cash transactions during the year ended January 31,
        2001:
      a) Equipment purchased from a director for consideration of $6,712 was
        unpaid and included in due to related parties.
      b) Automobile sold to a director for proceeds of $16,779 was offset
        against balance due to related parties.
      Significant non-cash transactions during the year ended January 31, 2002:
      a) The Company issued 2,750,000 common shares with a value of $334,623
        for the acquisition of CMTI and AIRT.
      b) The Company issued 75,000 common shares with a value of $75 for consulting
        services.
      No cash was paid during the years ended January 31, 2002 and 2001 for
        interest and income taxes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-20

---