|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB
Annual Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the fiscal year ended June 30, 2003
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         | CityXpress Corp    |                              
|------------------------ | ------------------ | -----------------------------
|                         | (Name of business) |                              
|Florida                  |                    | 98-0232838                   
|(State of incorporation) |                    | (IRS Employer Identification)

|Suite 200-1727 West Broadway Vancouver, BC Canada V6J 4W6               
|------------------------------------------------------------------------
|(Address of principal executive offices)                                
|                                                                        
|Issuer's Telephone Number 604-638-3811  Issuer's Fax Number 604-638-3808
|                                                                        
|Securities registered under Section 12(g) of the Exchange Act:          
|Common Shares, Par Value of $0.001 per Share                            
|(Title of Class)                                                        
|                                                                        
|Name of each exchange on which registered:                              
|NASD OTC BULLETIN BOARD                                                 

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

State issuer's revenues for its most recent fiscal year ended June 30, 2003 is $1,173,481.

The aggregate market value of the voting common equity held by non-affiliates computed at the average bid and asked price of common equity, as of October 14, 2003 based on 11,912,053 non-affiliate common shares is $833,843.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: October 14, 2003,  24,520,033 common shares.

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

Transitional Small Business Disclosure Format  (Check one):  Yes [x]  No [ ].



|TABLE OF CONTENTS                                                                                                  |   
|------------------------------------------------------------------------------------------------------------------ | --
|                                                                                                                   |   
|PART I                                                                                                             | 4 
|ITEM 1.  Description Of Business                                                                                   | 4 
|ITEM 2.  Description Of Property                                                                                   | 13
|ITEM 3.  Legal Proceedings                                                                                         | 13
|ITEM 4.  Submission Of Matters To A Vote Of Security Holders                                                       | 13
|                                                                                                                   |   
|PART II                                                                                                            | 14
|ITEM 5.  Market Price Of And Dividends On The Registrant's Common Equity And Other Shareholder Matters             | 14
|ITEM 6.  Management's Discussion And Analysis Or Plan Of Operation                                                 | 15
|ITEM 7.  Financial Statements                                                                                      | 23
|ITEM 8.  Changes In And Disagreements With Accountants                                                             | 24
|ITEM 8A. Controls And Procedures                                                                                   | 24
|                                                                                                                   |   
|PART III                                                                                                           | 25
|ITEM 9.  Directors Executive Officers And Significant Employees: Compliance With Section 16(A) Of The Exchange Act | 25
|ITEM 10.  Remuneration Of Directors And Executive Officers                                                         | 28
|ITEM 11.  Security Ownership Of Management And Certain Securityholders                                             | 33
|ITEM 12.  Interest Of Management And Others In Certain Transactions                                                | 35
|ITEM 13.  Compliance With Section 16(A) Of The Exchange Act                                                        | 37
|ITEM 14.Reports On Form 8K                                                                                         | 37
|                                                                                                                   |   
|PART F/S                                                                                                           | 40
|                                                                                                                   |   
|PART III EXHIBITS                                                                                                  | 41

NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain information contained in this annual report constitutes "forward-looking statements," including without limitation statements containing the words "believes," "anticipates," "intends," "expects" and words of similar import, as well as all projections of future results.

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, but are not limited to the following: under capitalization; unpredictability of future revenues; competition; risks of technological change; the Company's dependence on key personnel; dependence on continued growth in use of the Internet; the Company's ability to protect its intellectual property rights and uncertainty regarding infringing intellectual property rights of others; government regulations; and the other risks and uncertainties described in this annual report.

Part I

Item 1.	  Description of Business

General

CityXpress Corp (the "Company"), a Vancouver-based technology company, has developed a suite of online products that provide newspapers with powerful solutions through which they can extend their position as the dominant means for local advertisers to promote themselves to local consumers.  The Company's online auction product allows newspapers to auction vendor's products in exchange for advertising credits with the newspaper, with the newspaper retaining the cash from all products that are sold in the online auction.  The Company's online special sections, designed to complement the sections newspapers run regularly in their print editions, integrates niche editorial content with advertising and promotional tools that leverage a newspaper's brand and traffic.  Through alliances with newspapers, CityXpress is building a North American presence for its products, utilizing the advertising sales forces of its customers to sell its suite of promotional products.

The Company's XpressAuctionsä
 product offers newspapers the opportunity to boost advertising sales to local merchants through auctions that the newspaper sponsors throughout the year.  The program delivers incremental revenue to the newspaper, as they retain the cash generated from the online auction, and a unique low-cost promotion to the merchant who receives advertising credits with the newspaper equivalent to the retail value of the merchandise placed in the online auction.  XpressAuctionsä
 provides a complete package for the management and running of the newspaper's auction, with extensive workflow features built in to ease the work effort required by the newspaper.  The auction is hosted by CityXpress on its high capacity servers and complete support is provided to help the newspaper launch, sell and implement a successful auction program.

As well as enriching the content on their web sites, the Company's Special Sections offer newspapers a proven means of engaging print sales reps in the sale of online products.  Sales campaigns can now be implemented that co-ordinate the selling of print and online products around a niche Special Section, so that a single call to an advertiser can result in the sale of a package of print and online advertising and promotions.  The Special Section, a well-used device to "spike" print advertising revenue, becomes the focal point for a sales blitz.  By rolling out online Special Sections throughout the year in conjunction with their print equivalents, newspapers can effectively engage their print sales staff in their online efforts throughout the year.

Through alliances with newspapers whose portals have established a dominant position in their markets, the Company enjoys two significant advantages:

- We leverage our partners' brand and the traffic they are already generating to their sites,
- We gain immediate distribution for our products in our partners' markets through their print sales force.

Our solutions appeal to our partners' local advertising customers because:

- They are cost effective and easy to implement,
- They capture viewers from the portal, driving traffic both online and off-line to point of purchase.

Corporate History

The Company was incorporated as a Florida corporation on January 15, 1981 as Wicked Wings of Buffalo (Wicked Wings), a non-operating company traded on the NASD OTC Bulletin Board.  Pursuant to a share purchase agreement dated January 7, 1999, the shareholders of WelcomeTo Search Engine Inc. sold their 100% interest in WelcomeTo Search Engine Inc. to the Company in consideration for 8,510,000 shares of the Company, which represented a controlling interest of 62.5%.  This transaction was considered an acquisition of the Company by WelcomeTo Search Engine and was treated as a recapitalization of WelcomeTo Search Engine and the reverse acquisition of the Company by WelcomeTo Search Engine for accounting purposes.  For purposes of acquisition, the fair value of the net assets of the Company amounted to $724,989 and was ascribed to the 5,100,000 previously outstanding common shares of the Companydeemed to be issued in the acquisition.The reverse acquisition resulted in one-time costs of $225,000 for finder's fees pertaining to the acquisition of WelcomeTo which was paid for by the issuance of 450,000 common shares issued in an offering exempt from registration under Regulation S promulgated under the Securities Act to two Canadian companies.  The cost of recapitalization has been charged against stockholders' equity.

On January 27, 1999, the Company acquired 100% of the issued and outstanding shares of Xceedx Technologies Inc., a private British Columbia, Canada company incorporated on February 11, 1994whose principal business was providing Internet technology services and eCommerce software solutions.  The acquisition was accounted for by the purchase accounting method in which the results of operations have been included in the Company's accounts from the date of acquisition.  The Company issued 6,250,000 common shares for net assets of $875,000.

On August 27, 1999, the Company changed its name to CityXpress.com Corp.  The Company's web site is located at www.cityxpress.com. Information contained in the web site does not constitute a part of this filing.

On November 29, 2001, the Company changed its name to CityXpress Corp from CityXpress.com Corp.

Corporate Structure

CityXpress Corp has the following corporate structure:

- A Florida registered public company called CityXpress Corp

- CityXpress Corp has two private Canadian-based subsidiaries:

- WelcomeTo Search Engine Inc.
- Xceedx Technologies Inc.

All financial reporting for the Company is a consolidation of these three companies.

Industry Background



Newspapers have long been the primary vehicles through which local merchants promote their products and services to local consumers.  Alone for years in most markets with few well-funded competitors, newspapers have built tremendous brand equity.  With the advent of the Internet, they moved quickly to protect their two major sources of advertising revenue, classified and display, by establishing local web portals to complement their print operations.  Although these sites benefited from superior brand awareness, newspapers are being seriously challenged by powerful new online only competitors.

According to studies released by the Newspaper Association of America (NAA), newspaper sponsored online properties are being outperformed when measured against the benefits that pure online competitors such as AOL DigitalCity, CitySearch and Monster.com are delivering to local merchants.  This represents a direct threat to the heart of a newspaper's display and classified advertising revenue.  Newspapers recognize that how they meet this challenge will directly impact their long-term ability to maintain brand equity and market share.

Over and above the external threat, newspapers face the challenge of quickly adapting business practices that have evolved over decades to meet the demands of an Internet-based business.  Paid subscriptions, one of their major sources of revenue in the print world, are unpopular in an online environment where users are provided free access to a vast array of content.  Online advertising revenue is expected to fill this void but the amount of revenue that is being generated today is insufficient to support a dedicated online sales force.  Newspapers must engage their existing print sales forces to profitably generate online revenue from their sites.

Such efforts have met with mixed success, as print reps have resisted selling online products for a number of reasons.  Fear of cannibalization of their print advertising revenue and the unwillingness to commit time to selling lower cost online products at the expense of higher grossing print advertising have been the major deterrents to the drive to leverage a large installed print sales force.



Target Market

The Company distributes its full suite of solutions through alliances with media companies who have the capacity to sell our advertising and promotional products in their local markets through the sales forces employed by their network of newspapers and television stations.  The Company's target market includes both daily and weekly newspapers.

25 media companies who control 593 daily newspapers with a combined circulation of 40 million readers dominate the industry in the US.  In addition to the dailies controlled by the top 25 US companies, there are 883 American dailies owned by smaller companies. In Canada, there are 102 dailies.  Of the 1,578 dailies in the US and Canada, 1,426 daily newspapers, 90% of the total, now operate portal sites.

|                 |         | Number of Daily Newspapers by Circulation |                    |             
|---------------- | ------- | ----------------------------------------- | ------------------ | ------------
|Total Newspapers | <50,000 | 50,0001 to 100,000                        | 100,001 to 250,000 | Over 250,000
|1,578            | 1,329   | 126                                       | 79                 | 44          

[TABLE : pie chart]

Note 1.) Data supplied by the Newspaper Association of America.

The Company's products have been sold successfully in both large and small markets and by the sales staff of both daily and non-daily newspapers.  Newspapers that have participated in our special section program for a year have on average launched three Special Sections.  Although XpressAuctionsä
 is a relatively new product, our earliest customers are planning to launch a second online auction within six months of the first. As demonstrated by our performance to date, our products are appropriate to the needs of both small and large newspapers.

CityXpress Products

The Company has developed a suite of proprietary products that are used to deliver a range of services to our partners through our Internet server facility.  These services are integrated into our partner's sites as branded auctions or special sections.  Each of these service offerings, run on our web and database servers, provides our partners with additional content for their sites and provides their sales forces with a variety of revenue-generating services that can be sold to local businesses.  The Company provides our partners with sophisticated Internet-based tools to manage the content within each of the modules.

XpressAuctionsä

XpressAuctionsä
 provides a complete environment to allow a newspaper to set up, run and fulfill an auction.  A comprehensive administrative workflow environment is provided to allow the newspaper to set up and manage all aspects of an online auction, from entering product information and graphics directly into the auction database to collecting payments from successful bidders.  The auction engine automatically manages an auction when it is in progress, from managing bidder registrations to accepting bids and determining and posting leading bids.  A marketing subsystem is incorporated that, during the course of the online auction, provides bidders with messages encouraging them to continue bidding and with bid confirmations that include coupons for vendors on whose products they have bid.  A "reverse publishing" feature is also incorporated that automatically produces a print catalogue of items from the online database in a format specified by the newspaper.  A post-auction fulfillment system provides the newspaper with online and telephone facilities to collect bids and applicable taxes from the winning bidder.  The fulfillment system also allows a newspaper to manage payments from credit cards to cash payments, and move to second place bidders if winning bidders default on payment.

XpressSectionsä

XpressSections offer a group of stories and features related to the focus of the special section.  To appeal and draw readers back to the site on an ongoing basis, stories are refreshed daily.  As well as the current day's stories, readers can find previous stories archived by topic (e.g., Decorating or Home Improvement).  From the special section, users can access related business profiles, a coupon flyer and a shopping guide.  Large format, banner and tile ads may be sold and scheduled on the various pages of a special section.  CityXpress provides the editorial content for the special sections which is licensed from content providers under content agreements such as Tribune Media Service, United Press International, Universal Press Syndicate and Washington Post Writers Group.

The Company has pioneered the use of contextual links to display related products and services alongside the editorial copy within a Special Section.  Links are generated automatically based on the applicable promotional products sold into a Special Section.  Contextual links increase the results enjoyed by an advertiser, as they relate the promotion being displayed to the niche content of the section and deliver this promotion to a qualified consumer.

Similar to there print equivalents, the Company's online Special Sections targets niche consumers and provide advertisers with direct access to this valuable audience.  XpressSections content areas include:

|Home & Garden          | Automotive      
|---------------------- | ----------------
|Health & Wellness      | Weddings        
|Outdoors & Recreation  | Personal Finance
|Dining & Entertainment | Senior Living   
|Women's Magazine       | Holidays        

Other Proprietary Internet Products

The following products have been developed by CityXpress and, with the exception of XpressCoupons that is offered as part of both our auction and out special section products, are only sold as part of our XpressSections product line.

XpressCouponsâ

The XpressCoupons system is designed to build traffic to a company's storefront and decrease the cost of customer acquisition.  XpressCoupons provide a means for both online and offline redemption.  Online redemption is provided through the ability to link a banner ad promoting a specific product directly to the shopping basket of a vendor's eCommerce site.  Offline redemption is provided through the ability for the user to print the coupon, complete with bar code, for in-store redemption.  The XpressCoupons system is implemented as part of both XpressAuctionsä
 (where it can be configured to deliver a vendors' coupons to individuals bidding on the vendor's products) and XpressSections (where available coupons are linked to and displayed alongside editorial content and in a advertiser's Business Profile).

XpressProfilesä

XpressProfiles provide advertisers with a business profile that includes company name, address, telephone numbers, web site URL, email address and a 250-character business description.  Business profiles also highlight other promotions that the company has purchased, for example discount coupons or print ads that are being displayed online; access to these promotions is provided from links automatically embedded in the business listing.  XpressProfiles are offered in conjunction with XpressSections where access to business profiles is provided by links that are displayed alongside editorial content.

XpressShoppingGuideä

XpressShoppingGuide allows product listings to be set up and maintained for multiple vendors as part of a Shopping or Gift Guide.  The shopping guide allows businesses to promote products or services with the option of allowing viewers to purchase online or to request more information directly from the vendor.  Products in the shopping guide can be linked to XpressCoupons to encourage users to click-through for discounts.  XpressShoppingGuide is offered in conjunction with XpressSections. Products, as well as being listed in the Special Section's shopping guide, are listed under each company's Business Profile and as a link under the Merchandise section next to editorial content.

XpressStoresä

XpressStores provides a small business with the ability to build and maintain an electronic storefront through a browser-based Internet application.  Through a wizard, each user controls the look-and-feel of the site and configures his/her own payment, tax, shipping options and other business functions.  Products in XpressStores can be linked to XpressCoupons to encourage users to click-through for online discounts. XpressStores is offered in conjunction with XpressSections where the electronic storefront is listed under each company's Business Profile and as a link under the Stores & Kiosks section next to Special Section editorial content.

XpressKiosks/Web Brochuresä

XpressKiosks allows a business to build and maintain a three-page marketing brochure site by selecting templates and adding their own text and graphics.  Companies may link their online stores to their Kiosk.  XpressKiosks is offered in conjunction with XpressSections and are listed under each company's Business Profile, and under the Kiosks section next to Special Section editorial content.

XpressExpertsä

XpressExperts allows a business to profile itself as a local expert on a topic of their choice, providing readers with the means to post questions to the expert and the expert with the tools to manage and respond to questions that are posted.  XpressExperts is offered in conjunction with XpressSections and links to XpressExperts sites are incorporated into the applicable Special Section.

Technology Platform

The Company has built a proprietary software development platform, XpressWorks, which is used to develop our next generation of products.  XpressWorks development was completed in November 2000.  XpressWorks is designed to speed the development and deployment of new applications.  The Company has ported their XpressWorks application framework and applications to J2EE architecture.  This has allowed for a quicker development cycle and for more robust applications.  The port of the application framework was completed in September 2001.  The port of the last application was completed in August 2002.

In conjunction with the application development several new enterprise level systems were deployed.  This includes a network load balancer, server clustering, and management systems.  Given the scale of the XpressAuctionsä
 deployments this allows us to effectively and confidently operate this application.

The Company's development program is committed to adding other products that will grow the number and attractiveness of our offerings.  The focus of new development will be on XpressAuctionsä
.. This product will be enhanced with extended fulfillment and production features.  The Company plans to expand its XpressAuctionsä
 product in both continuous vendor auctions and classified auctions both targeted for the newspaper market.

During the year ended June 30, 2003, the Company capitalized $121,694 of its costs relating to the development of new products.  These costs will be amortized over the next three years.

Product Development

The Company's in-house development staff develops our online auction and special section software products.  Our product development environment is based upon industry-standard technologies, including Linux, Java Server, Microsoft NT Server, and SQL Server.  As of June 30, 2003, the Company employed 8 developers and software engineers.

The Company has spent approximately $410,919 for the year ended June 30, 2003 and $382,186 for the year ended June 30, 2002 on company-sponsored research and development activities, expensing both these amounts.  The Company has also spent $121,694 for the year ended June 30, 2003 and $122,886 for the year ended June 30, 2002 on internal development costs that were capitalized.

The Company's development efforts focus is on extending its products' capabilities in areas that will provide increased revenue to our newspaper clients and greater value to their local advertiser.  A secondary focus is providing additional workflow functions that make it easier for a newspaper to use our products.

Intellectual Property

The Company regards its software as proprietary and attempts to protect it with a combination of copyright, trademark and trade secret laws, employee and third-party non-disclosure agreements, licensing agreements and other methods of protection.  Despite these precautions, it may be possible for unauthorized third parties to copy certain portions of the Company's products or reverse engineer or obtain and use information the Company regards as proprietary.  As of June 30, 2003, the Company has trademarked the name "CityXpress" and XpressCoupons" in Canada.  By October 31, 2003, the name "CityXpress" will be trademarked in the United States.

As the number of software products in the industry increases and the functionality of these products further overlaps, the Company believes that software programs will increasingly become subject to infringement claims.  There can be no assurance that third parties will not assert infringement claims against the Company in the future.  Any such assertion could require the Company to enter into royalty arrangements or result in costly litigation.

Sales and Marketing

Sales

With the signing of an agreement with Lee Enterprises Incorporated ("Lee") in November 1999, the Company established its first strategic relationship with a media company with a strong regional presence in the US.  Lee began rolling out the first version of the Company's Special Sections in May 2000, with a view to completing a rollout to 12 of its 28 daily newspapers by October 2000.  Lee presented the Company with an opportunity to refine and validate our products and to build a success story we could take to market.  This phase culminated in February 2001 with the release of version 3 of our Special Sections that addressed needs identified by Lee's first sites.  Lee's success with our products led to extensive coverage by leading trade journals and to a direct investment in the Company by Lee (these investments are explained below in a subsection in Part II entitled Financing and Liquidity).

With the formal launch of our online special section product in February 2001, the Company commenced a sales program to secure the next series of accounts.  These efforts are continuing and to date have resulted in sales agreements with 54 newspapers running 182XpressSections.  These include agreements with major chains such as Lee incorporated (Lee) and Freedom Communications and large independents such as the Buffalo News.  As of June 30, 2003 Lee newspapers have rolled out 149 Special Sections across 42 newspapers.

In February 2002, the Company announced its online auction product.  By June 30, 2002, the Company had conducted online auctions for four Canadian and US newspapers, which ran six online auctions.  The Company was focusing the efforts of its sales representatives on introducing the product to US newspapers.  In July 2002, the Company acquired 10digit Communications, a Canadian company that had conducted approximately 30 online auctions for more than 24 Canadian newspapers.  The Company and 10digit in combination had run 41 online auctions by June 30, 2002 positioning the Company as the leading supplier of online auctions to newspapers.  For fiscal year 2003, the Company have ran 49 online auctions generating $784,936 in online auction revenue compared to $66,200 for fiscal year 2002, an increase of 1,100%.

On June 30, 2003, the Company employed three direct sales representatives selling the online auction product to US and Canadian newspapers and one representative selling the special sections.  Marketing efforts including direct mail programs and public relations initiatives to keep our name in the forefront are ongoing to support the activities of the direct sales force.

Sales Development

The Company derives revenues by utilizing our media partners' sales forces that are already calling on and selling advertising to local businesses.  Because we rely on the efforts of our media partners, the Company employs a sales development team responsible for working with and maximizing the revenues of each partner's sales force.  Our team assists with the initial training of our partners' sales representatives and delivers ongoing programs to continually focus each newspaper's sales force on effectively selling our solutions.  The team works with each of our partners to integrate our products into their existing line cards, so that they can be offered as "up-sells" to new and existing customers.

Market Communications

A continuous communications and public relations program has assisted in establishing the Company's market position and raising trade press coverage.  By securing validation from key industry influencers for the Company's direction and strategy, this communication program is aimed at contributing to sales success and lowering the cost of sales efforts.  The program has resulted in regular coverage in major trade journals such as Editor & Publisher, Presstime, Digital Edge, News Inc., Newspapers & Technology, Classified Intelligence, and MediaDailyNews.

CityXpress Competition

The Company is a pioneer in the development of both auctions and online special sections.  With a larger installed base of newspapers using our products and with superior features and service offerings, the Company is the leading vendor in both market segments.  Both segments are in their infancy and other companies are emerging with competing products.  In the auction segment, A.M Stone/Auction Media and edeal Services Corp. offer competing products.  In the online special section segment, Content That Works and Publisher's Edge offer special sections that compete with one or more of our special sections.

Competitive Advantage

In the auction segment, the Company enjoys two significant advantages.  It has a very large and strong reference base of accounts that have successfully launched online auctions over the past year, important in a market that looks for proven products and solutions.  As well, XpressAuctionsä
 offers unique workflow features that allow newspapers to reduce the overall cost and effort required to implement an auction.  Our built-in marketing module offers a newspaper's advertisers the means to increase store traffic and revenue.  Our experience over the past three years assisting newspapers introduce new programs to their sales forces has allowed us to offer a program through our sales development team that promises strong results.

In the special section segment, the Company is differentiated from our competitors by the fact that our products integrate editorial content that is refreshed daily with a suite of advertising and promotional products that have been proven to generate revenue for our customers.  Competitive products do not provide fresh editorial content on a daily basis - essential to attract and maintain an online readership - and do not offer a competitive suite of advertising and promotional products integrated around the editorial copy.  The Company has established strong reference accounts that are prepared to speak to the results they have enjoyed rolling out our products and our strong sales and implementation team that assists them in launching our Special Sections.

Client Services and Client Support

The Company provides each media partners' newspapers with a program developed by the Company to train the media partners' sales representatives on the Company's products and selling techniques for each product.  The Company also provides training to the newspaper administrative staff responsible for entering promotional product information into the Company's applications.  Customer support for the administrative staff of our media partners who enter promotional products is provided directly by the Company's staff and delivered via electronic mail and telephone.  As at June 30, 2003, seven people were involved in the Company's client services and client support departments.

Employees

The Company has a strong core management team with significant experience in the development of early stage companies and new software products.  It has also built a solid development, client services and customer support team.

Year-End Staffing Levels



|Department                       | June 30, 2003 | June 30, 2002
|-------------------------------- | ------------- | -------------
|Executive                        | 3             | 3            
|Finance and Administration       | 2             | 2            
|Sales and Marketing              | 6             | 2            
|Marketing and IR                 | 1             | 1            
|Product Development              | 8             | 8            
|Client Services/Customer Support | 7             | 5            
|Total Staff                      | 27            | 21           

Item 2.  Description of Property

The Company's principal business office is located at Suite 200, 1727 West Broadway, Vancouver, British Columbia, Canada V6J 4W6.  The Company renewed its lease agreement for another four years commencing on May 1, 2003.  Our monthly payments remain at approximately $8,000 U.S.

On August 30, 2002, the Company opened a sales office located at 803 Corydon Avenue, Winnipeg, Manitoba, Canada R3M 0W6.  The Company signed a lease agreement for a year commencing on September 1, 2002.  Monthly payments for the Canadian sales office are approximatly $900 U.S.

Item 3.  Legal Proceedings

There are no pending legal proceedings to which the Company is a party.

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

No matters were submitted by the Company to a vote of security holders during the fourth quarter of the Company's fiscal year ended June 30, 2003.



PART II

Item 5.  Market Price of and Dividends on the Registrant's Common Equity and Other Shareholder Matters.

Shares of the Company's Common Stock trade on the OTCBB under the symbol CYXP. The following table at month end sets forth the range of high and low bid quotations (as reported by NASDAQ) for the period September 30, 2001 to August 31, 2003.  These quotations reflect inter-dealer prices without retail markups or markdowns or commissions and may not represent actual values.

|Month Ended        | High Bid | Low Bid
|------------------ | -------- | -------
|September 30, 2001 | 0.0400   | 0.0200 
|October 31, 2001   | 0.0500   | 0.0200 
|November 30, 2001  | 0.0400   | 0.0200 
|December 31, 2001  | 0.0500   | 0.0300 
|January 31, 2002   | 0.0600   | 0.0300 
|February 28, 2002  | 0.0800   | 0.0400 
|March 31, 2002     | 0.1100   | 0.0600 
|April 30, 2002     | 0.1000   | 0.0500 
|May 31, 2002       | 0.0900   | 0.0500 
|June 30, 2002      | 0.0600   | 0.0500 
|July 31, 2002      | 0.0600   | 0.0300 
|August 31, 2002    | 0.0500   | 0.0300 
|September 30, 2002 | 0.0500   | 0.0300 
|October 31, 2002   | 0.0400   | 0.0100 
|November 30, 2002  | 0.0600   | 0.0200 
|December 31, 2002  | 0.2500   | 0.0400 
|January 31, 2003   | 0.1600   | 0.0900 
|February 28, 2003  | 0.1300   | 0.0700 
|March 31, 2003     | 0.1000   | 0.0700 
|April 30, 2003     | 0.0700   | 0.0400 
|May 31, 2003       | 0.0600   | 0.0300 
|June 30, 2003      | 0.1500   | 0.0400 
|July 31, 2003      | 0.0900   | 0.0500 
|August 31, 2003    | 0.1100   | 0.0500 

As of June 30, 2003 there were 144 holders of record of shares of the Company's Common Stock.

The Company has not declared or paid any cash dividends on its Common Stock since inception, and the Company's Board of Directors currently intends to retain all earnings for use in the business for the foreseeable future.  Any future payment of dividends will depend upon results of operations, financial condition, cash requirements and other factors deemed relevant by the Company's Board of Directors.

On December 12, 2001, the Company issued 160,000 common shares to a consultant outside the United States for consulting services rendered to the Company with a fair market value of $4,800 (representing $0.03 per share).  The offering was not underwritten. The sale was exempt from registration under Regulation S promulgated under the Securities Act and Section 4(2) of the Securities Act.

On April 17, 2003, the Company agreed to issue 198,587 common shares at $0.0637 per share to its directors for services with a fair market value of $12,650. See Item 10 under Compensation of Directors.

Item 6.  Management's Discussion and Analysis or Plan of Operation

Current Year Performance

The following discussion and analysis explains trends in the Company's financial condition and results of operations for the years ended June 30, 2003 and 2002.  The consolidated financial statements and notes thereto included, as part of the financial statements, should be read in conjunction with these discussions.  All figures are presented in US Currency, unless otherwise stated.

The Company incurred a net loss for the twelve months ended June 30, 2003 of $1,124,582 as compared to a loss of $1,829,444 for the same period in 2002,a decrease of $704,862.  The Company recorded revenue of $1,173,481 for the year ended June 30, 2003 compared to revenue of $414,530 for the year ended June 30, 2002, an increase of 183% or $758,951 over last year. Approximately 24% or $280,082 of this year's revenue resulted from payments made to the Company by newspapers owned by Lee.

The decrease in net loss of $704,862 is comprised of increases in certain expenses and decreases in other expenses and an increase in revenue primarily as follows:

- Increase in Internet expense of $12,987 for the year ended June 30, 2003 over the same period ending June 30, 2002 is the result of increased Internet usage and additional Internet lines for sales office in Winnipeg, Manitoba.
- Increase in the cost of auction services of $18,432 for the year ended June 30, 2003 compared to the previous year ended June 30, 2002 is the result of additional cost of outsourcing telephone support services for auctions.
- Increase in legal expenses of $31,355 for the year ended June 30, 2003 over the same period ending June 30, 2002 is the result of additional legal costs to review auction licencing requirements in the U.S. and general corporate matters.
- Increase in depreciation expense of $67,843 for the year ended June 30, 2003 over the same period ending June 30, 2002 is the result of additional computer equipment and software acquired during the year.
- Decrease in amortization of eCommerce Technology of $253,884 for the year ended June 30, 2003 over the same period ending June 30, 2002 is due to previously acquired eCommerce Technology being amortized completely over its remaining seven months in fiscal year 2002. For fiscal year 2003, unamortized eCommerce Technology consists of only intangible assets acquired from 10digit this period having only a balance of $74,942 and therefore the amortized amount was less this year.
- Increase in sales promotion and travel expenses of $110,978 for the year ended June 30, 2003 over the same period ending June 30, 2002 is primarily due to more sales training trips for new online auction customers representing expenses of $74,868.
- Increase in sales salaries and benefits expenses of $107,660 for the year ended June 30, 2003 over the same period ending June 30, 2002 is due to addition of four sales staff to assist with recruiting and providing training to new online auction clients.
- Decreased costs for licensing the Dun & Bradstreet database of business information for Canada and the United States of $252,348.  This decrease was due to only re-licensing a segment of the U.S. data for this year.
- Increase in stock-based compensation expense of $92,844, which relates to two non-cash transactions for executive officer warrants and directors' common shares granted during the year ended June 30, 2003.  The first component of this non-cash expense relates to granting 1,310,626 warrants on March 3, 2003 and 782,187 warrants on June 16, 2003 to two executive officers for shareholder loans made to the Company, which resulted in a non-cash expense for the year, ended June 30, 2003 of $80,644.  The second component of this non-cash expense relates to granting 198,587 common shares to directors for services, which resulted in a non-cash expense for the year ended June 30, 2003 of $12,650.  Stock-based compensation expense for the year ended June 30, 2002 was $450.
- Increase in foreign exchange losses of $102,180 for the year ended June 30, 2003 over the same period ending June 30, 2002 is the result of the increasing value of the Canadian dollar compared to the U.S. dollar during the year.  For the 2003 fiscal year, 84% or $984,878 of the total revenue was generated from U.S. customers

- The $758,951 increase in revenue helped to reduce the operating loss for year ended June 30, 2003.

For the year ended June 30, 2003, revenue increased from $414,530 to $1,173,481, an improvement of $758,951 or 183%.  The revenue increase reflects the continuing rollout of XpressAuctionsä
 to our newspaper clients.  XpressAuctionsä
 accounted for $784,963 or 67% of total revenue while Special Sections accounted for $388,518 of the total or 33%.

XpressAuctionsä
 revenue consists of the following revenue categories:

- Auction revenue of $660,969 or 56% of total revenue. Online auction revenue includes the revenue received for facilitating newspaper online auctions where products of newspaper clients are sold in the online auction in exchange for advertising space in the newspaper.
- Training revenue of $123,994 or 11% of total revenue.  Training revenue pertains to training the media partners' sales force, web designers and support staff on the Company's XpressAuctionsä
 products and administrative tools.

Special Sections revenue consisted of the following revenue categories:

- Advertising and promotional fees of $202,719 or 17% of total revenue.  Advertising and promotional revenue covers the revenues received from a newspaper for promotional products sold as part of a Special Section, such as premier listings, coupons, banner ads, product displays, web brochures and experts.
- Editorial content fees of $185,799 or 16% of total revenue.  Editorial content revenue covers the revenue received from a newspaper for supplying editorial content for each Special Section rolled out by a newspaper.

The Company recorded cost of sales for the year ended June 30, 2003 of $467,841 compared to $581,639 for the year ended June 30, 2002, a decrease of $113,798 or 20%.  This decrease is primarily the result of the following expense categories:

- Increase in cost of outsourcing auction support services of $18,432 for telephone support services provided to bidders in the online auction.
- Increase in amortization of $36,260, which resulted from increase in product development costs associated with further developments of online auction and special section products.
- Increase in travel costs of $74,868 for XpressAuctionsä
 training trips for new auction clients.
- Decrease in Dun & Bradstreet database cost of $252,348 for business listing information.

Current Year Quarterly Performance

The Company's quarterly results as indicated below demonstrate that the Company has made quarterly improvements in the following areas:

- Revenue has increased each quarter over the previous quarter
- Cost of sales expense has decreased each quarter over the previous quarter
- Gross profit has increased each quarter over the previous quarter
- Total operating loss has decreased each quarter over the previous quarter



|                       | YTD         | 1ST
QTR.  | 2ND
QTR.  | 3RD
QTR.  | 4TH
QTR.  | YTD        
|---------------------- | ----------- | --------- | --------- | --------- | --------- | -----------
|                       | 6/30/2002   | 9/30/02   | 12/31/02  | 3/31/03   | 6/30/03   | 6/30/03    
|                       |             |           |           |           |           |            
|Revenue                | 414,530     | 163,198   | 193,040   | 376,364   | 440,879   | 1,173,481  
|Cost of Sales          | 581,639     | 109,887   | 103,696   | 140,003   | 114,255   | 467,841    
|Gross Profit (Loss)    | (167,109)   | 53,311    | 89,344    | 236,361   | 326,624   | 705,640    
|Operating Expenses     | 1,577,277   | 275,429   | 323,396   | 423,063   | 520,187   | 1,542,075  
|Operating Loss         | (1,744,386) | (222,118) | (234,052) | (186,702) | (193,563) | (836,435)  
|Other Income (Expense) | (178,158)   | (34,238)  | (57,506)  | (56,895)  | (139,508) | (288,147)  
|Loss Before Taxes      | (1,922,544) | (256,356) | (291,558) | (243,597) | (333,071) | (1,124,582)
|Deferred Taxes         | 93,100      | 0         | 0         | 0         | 0         | 0          
|Net Loss               | (1,829,444) | (256,356) | (291,558) | (243,597) | (333,071) | (1,124,582)

Client Product Rollout Special Sections

In the year ended June 30, 2003 the Company completed a rollout with Lee to all 42 of Lee's daily newspapers.  This rollout has resulted in 149 Special Sections being integrated into 31 of these 42 newspapers.  These Special Sections cover Home & Garden, Outdoors & Recreation, Weddings, Health & Wellness, Dining & Entertainment, Personal Finance, Automotive, and Senior Living.  The Company also expects these 42 Lee newspapers that have launched a Special Section to launch additional Special Sections in the fiscal year 2004.  Since we began implementation in July 2000 of our products at Lee newspapers revenue has increased by 19% from $236,160 last year to $280,082 for the year ending June 30, 2003.

In May 2001 the Company signed a media agreement with Buffalo News of Buffalo New York, a wholly owned subsidiary of Berkshire Hathaway Inc. with daily circulation of 240,000.  Buffalo.com rolled out the Home & Garden Special Section in June 2001 and Health & Wellness in February 2002.  The Company expects Buffalo.com to launch additional Special Sections during fiscal year 2004.

In June 2001 the Company signed a media agreement with Freedom Newspapers Inc. (Freedom) headquartered in Irvine California.  Freedom is the twelfth largest media company in the United States based on weekday circulation and operates 28 daily newspapers, 37 weekly publications, 8 broadcast television stations and 50 affiliated Internet sites.  The first Freedom newspaper to rollout a Special Section was the Shelby Star in Shelby North Carolina, which implemented the Health & Wellness Special Section in June 2001.  The next Freedom paper to launch a Special Section was The Monitor in McAllen Texas. In January 2002, the Company signed a corporate Special Section Agreement with the Community Newspaper Group of Freedom Newspapers Inc. to provide Special Sections to the 25 dailies in the group.  As of June 30, 2003, 14 of these newspapers had launched 22 Special Sections.  The Company expects the Freedom Community Newspaper Group to launch additional Special Sections across their remaining daily newspapers during fiscal year 2004.

Client Product Rollout XpressAuctionsä

For the year ended June 30, 2003,the Company ran 49 XpressAuctionsä
 for newspapers in Canada and the United Sates generating auction revenue of $784,963.

In July 2002 the Company acquired 10digit Communications the online auction division of the Winnipeg Free Press.  10digit Communications which had run 35 auctions with the majority being for newspapers owned by CanWest Global Communications Corp. (CanWest).  During the period from July1, 2001 to June 30, 2002, 10digit Communications generated auction revenues of approximately $200,000.

The Company has run 49 XpressAuctionsä
 for the year ended June 30, 2003 with 36 United States newspapers and 11 Canadian newspapers compared with six XpressAuctionsä
 for the year ended June 30, 2002.  The Company is currently contracted to run 41 XpressAuctionsä
 between July 1, 2003 and June 30, 2004, with 40 XpressAuctionsä
 running between July 1, 2003 and November 30, 2003.  The Company expects many of the 47 clients who ran XpressAuctionsä
 to run repeat auctions this fall.

Many of the Company's clients are running their second auction and some newspapers have run three XpressAuctionsä
 in the past 12 to 15 months.  The Company expects that many of its XpressAuctionsä
 clients will also run continuous vendor and classified auctions in fiscal 2004. Also, the Company feels it can further strengthen its relationship with its newspaper clients by selling Xpress Special Sections to XpressAuctionsä
 clients.

Financing and Liquidity

As of June 30, 2003, the Company had a cash balance of $12,308, accounts and other receivables of $101,301, prepaid expenses of $26,603, a working capital deficiency of $5,222,941 that included shareholders' loans of $611,942, deferred revenue of $250,763, current portion of obligations under capital lease of $70,812, accounts payables and accrued liabilities of $712,846, current portion of Lee loans payable of $350,000 and Lee convertible debentures of $3,300,000.

On January 10, 2003, the Company repaid its Demand instalment loan with the Canadian Imperial Bank of Canada from the proceeds of shareholder loans made to the Company by two of its senior officers.

On August 16, 2000, the Company entered into a Loan and Security Agreement with its major customer, Lee.  Under this loan agreement, the Company entered into two $125,000 promissory notes that bear interest at the Wall Street Journal prime rate and mature in November 2000.  The Company also signed a Collateral License Agreement covering the Licensing of the Company's software to Lee should the Company default under the agreement occur.  The Company also signed a three party Escrow Agreement to escrow the Company's software with a third party escrow agent.  On September 19, 2000 another Promissory Note Agreement was entered into for $40,000.  The promissory notes bear interest at the Wall Street Journal prime rate and mature in December 2000.  As of September 19, 2000, total cash of $290,000 has been received under this agreement.

As part of the November 1, 2000, Investment Agreement, the Loan and Security Agreement dated August 16, 2000, was amended by changing the repayment terms of the promissory notes detailed below to October 31, 2002:



- Two promissory notes for $125,000 each dated August 16, 2000 with original maturity dates of November 2000.

- One promissory note for $40,000 dated September 19, 2000 with an original maturity date of December 2000.

On July 12, 2001 an additional $60,000 loan was received from Lee resulting in a total total loan payable at June 30, 2002 of $350,000.  As of June 30, 2003, accrued interest on the Demand Loans amounted to $54,503.

On November 1, 2000, the Company entered into an Investment Agreement with Lee whereby Lee would provide funding of up to $1,500,000 in the form of a floating rate subordinated convertible debenture.  The $1,500,000 subordinated convertible debenture would consist of a series of debentures (Series A-F debentures) of $250,000 that would be funded during the period from November 2000 to May 2001.  The Company received $1,500,000 in funding under the debenture from October 2000 to May 2001.  The Investment Agreement provides Lee the right to convert the floating rate subordinated convertible debenture into 6,902,429 common shares of the Company at a conversion price of $0.2173 per common share.  The Investment Agreement also contains certain affirmative and negative covenants that restrict the Company's activities.  Each series of $250,000 subordinated convertible debenture bears interest at the Wall Street Journal rate less 1%.  The weighted average effective rate for the year ended June 30, 2003 was 3.40% (2002- 4.25%).  Interest due on the convertible debenture can be repaid or converted to the Company shares at fair market value on the date of conversion at Lee's option.  As of June 30, 2003, accrued interest under the debentures totalled $166,310.  The Investment Agreement includes a Registration Rights Agreement providing Lee the ability to require the company to register the shares issuable under the Investment Agreement based on certain conditions.  A condition resulting in the Company registering the Lee shares is if the Company did a United States public offering with a registration statement.

On July 30, 2001, the Company amended the Investment Agreement dated November 1, 2000 with Lee, whereby Lee would provide additional funding of up to $1,500,000 in the form of a floating rate subordinated convertible debenture (series G-R debentures).  This would result in a total investment by Lee of $3,000,000 if all debentures were converted.  The additional $1,500,000 subordinated convertible debenture would consist of a firm commitment of $710,000 and a discretionary commitment of $790,000 in the form of a series of debentures (series G-R) ranging in value from $310,000 to $50,000 each.  The series G-R debentures would be funded from August 10, 2001 to July 1, 2002.  The Company received $310,000 under the series "G" debenture by August 14, 2001 and $200,000 under series H debenture by September 5, 2001. The Amended Investment Agreement provides Lee the right to convert the second $1,500,000 floating rate subordinated convertible debenture into 8,522,727 common shares of the Company at a conversion price of $0.1760 per common share.  The first investment of $1,500,000 allowed Lee to convert their series "A-F" debentures to 6,902,429 common shares of the Company at a conversion price of $0.2173 (Note 9 in the audited financial statements).  Should Lee convert all debentures totalling $3,000,000 it would result in the Company issuing 15,425,156 common shares.  The Amended Investment Agreement also contains certain affirmative and negative covenants that restrict the Company's activities.  As of June 30, 2003, the Company is in compliance with all the covenants in the Investment Agreement.  Each Series G-R subordinated convertible debenture bears interest at the Wall Street Journal rate less 1%.  Interest due on the convertible debenture can be repaid or converted to shares of the Company at fair market value on the date of conversion at Lee's option.  In conjunction with the Amended Investment Agreement dated July 30, 2001, the Company also amended the November 30, 2000 Loan and Security Agreement, the Collateral License Agreement and the Registration Rights Agreements to reflect the series G-R debentures.

On August 1, 2002 the Company amended the Lee Investment Agreement dated July 30, 2001 adding an additional three subordinated convertible debentures designated series S-U for a total of $300,000.  The Company has received $100,000 for the Series S debenture, $125,000 for the Series T debenture and $75,000 for the Series U debenture as of June 30, 2003.  The weighted average effective rate for the year ended June 30, 2003 on these debenture series "G-U" was 3.39%. As of June 30, 2003, accrued interest under the debenture totalled $92,463.

On July 16, 2003 the Company and Lee entered into a Third Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $100,000 in the form of a floating rate subordinated convertible debenture.  The additional $100,000 subordinated convertible debenture was in the form of a series "V" debenture, which was funded on July 16, 2003.

On August 14, 2003 the Company and Lee entered into a Fourth Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $100,000 in the form of a floating rate subordinated convertible debenture.  The additional $100,000 subordinated convertible debenture was in the form of a series "W" debenture, which was funded on August 14, 2003.

As of September 25, 2003 Lee has invested with and loaned to the Company a total of $3,850,000 as detailed below:

|Series A-F Debentures                                      | $1,500,000
|---------------------------------------------------------- | ----------
|Series G-R Debentures                                      | 1,500,000 
|Series S-U Debentures                                      | 300,000   
|Total Convertible Loan Debentures as of June 30, 2003      | $3,300,000
|Series V Debenture                                         | 100,000   
|Series W Debenture                                         | 100,000   
|Total Convertible Loan Debentures as of September 25, 2003 | $3,500,000
|Loan payable October 31, 2003                              | 350,000   
|Total Debentures & Loans                                   | $3,850,000

All of the

On January 10, 2003, the Company's chief executive officer and chief financial officer loaned the Company $350,000 Cdn ($259,740 US).

In February 2003, the Company's chief executive officer and chief financial officer loaned the Company $59,000 Cdn ($43,785 US).

In May 2003, the Company's chief executive officer and chief financial officer loaned the Company $20,100 Cdn ($14,917 US).

During the year ended June 30, 2003, the Company repaid a portion of the unsecured shareholder loans to the two executive officers totalling $9,856.

The terms for these shareholder loans are described in Item 12 Shareholder loans and in the audited consolidated financial statements Note 13 (a) Shareholder Loans.

Based on the forecasted expenditures for the year ended June 30, 2004, the Company forecasts minimum annual operating cash requirements of approximately $2.6 million.  The Lee Enterprise investment of $200,000 provides the Company 8% of its forecasted operating cash requirements for fiscal year 2004.  Revenue from new media companies under contracts in June 2003 will help to offset the Company's cash flow shortfall of $2.4 million.  The Company expects additional revenues from clients signed in fiscal 2004 as they continue to launch additional XpressAuctionsä
 and Special Sections.

The Company is expecting XpressAuctionsä
 to continue contributing significant revenues in fiscal 2004 as the Company intensifies its direct marketing efforts in the United States.  The Company expects to generate new auction revenue from both continuous vendor auctions and classified auctions when these products are launched in fiscal year 2004.  Also the Company is having success cross marketing Special Sections and XpressAuctionsä
 with its existing client base.  Special Sections clients are contracting for XpressAuctionsä
 and new XpressAuctionsä
 clients are contracting for Special Sections.  The Company also anticipates that clients who ran XpressAuctionsä
 in fiscal year 2003 would run another XpressAuctionsä
 in fiscal year 2004.

The Company anticipates significant operating revenue improvements from both XpressAuctionsä
 and Special Sections in fiscal year 2004.

Plan of Operation

The Company is dependent on obtaining additional financing for ongoing operation, capital expenditures and working capital.  There is no assurance that such financing will be available when required by or under terms favorable to the Company.

The Company anticipates that media revenue from Lee will grow as Lee implements the Company's products at more of its daily newspapers.  Revenue generated from Lee for the period ended June 30, 2003 amounted to $280,082.  Revenue from Lee over the next year is expected to increase as Lee is continuing to roll out Special Sections across its 42 daily newspaper properties, which will result in increased revenue to the Company.  The Company also expects revenue to grow as each newspaper launches multiple Special Sections.  The Company also expects to see increasing revenues from the Special Sections launched by Buffalo.com and Freedom to its 25 Community Newspapers (14 out of 25 have rolled out Special Sections as of June 30, 2003).  The Company will work closely with each contracted media company to ensure that Special Sections are launched in all their newspapers.  The Company expects additional Lee newspapers to run XpressAuctionsä
 in fiscal year 2004.  In fiscal year 2003, 2 of Lee's 42 daily newspapers ran XpressAuctionsä
..  Also, we expect Freedom to run additional XpressAuctionsä
 in the 2004 fiscal year. Freedom ran 6 XpressAuctionsä
 with 6 of their 25 Community Newspapers in fiscal year 2003.

The Company expects to generate auction revenue from auction clients of 10digit Communications in fiscal year 2004.  The Company expects auctions will generate significant revenue in fiscal year 2004 from new auction clients, repeat auction clients and new auction products.

The Company also intends to develop additional products in conjunction with its media partners that will leverage the sales relationship it has developed with each media partner.  These future products will allow the media company's sales force to have additional products that they can sell to their local markets.  These additional products will result in incremental revenue for the Company from its established newspaper customer base.  Each additional media company agreement will generate additional revenue and cash flow.  Management is confident it will be successful in closing additional media agreements in the next year.

The Company is presently seeking additional funding through private offerings with individuals, institutions and media partners.  The Company believes it can raise additional funds through these offerings.

The management of the Company believes that it will generate sufficient cash through private offerings, customer revenue and investments from media partners to fund its operations for the 12-month period ending June 30, 2004.

Business Risks

The Company faces significant business risks on a going forward basis, which could negatively impact the Company:

- Raising the equity financing needed to operate the Company at its current operating level and providing the operating funds, capital additions and repayment of liabilities in a timely manner.  If the Company is unsuccessful in this regard it will be required to reduce operating expenditures to a level that will be in-line with cash flows.
- The Company may be unsuccessful in obtaining additional media partners and its agreement with contracted clients may result in lower revenues than projected.  In either case, the Company would have to re-evaluate its business model to determine if there was another partnership arrangement that would provide the economic, cash flow or business advantages it currently believes will be provided by media companies.  The Company at this time cannot assess whether it could find other business partners and negotiate favorable terms that would provide the necessary revenue and cash flow required by the Company.  If the Company is unsuccessful in this regard it will be required to reduce operating expenditures to a level that will be in-line with cash flows.
- The projected revenues and success of newspaper Auctions may not meet the expectations of the Company.
- A major competitor or new company could dominate the market sector being targeted by the Company.  The Company would then have to assess the impact of the situation.  The United States and Canadian newspaper markets are large and there may be room for multiple suppliers to service existing media companies.  If not, then the Company would have to assess other market sectors it could penetrate successfully.  If the Company is unsuccessful in this regard it will be required to reduce operating expenditures to a level that will be in-line with cash flows.

- The Company is dependent on key senior development personnel who have developed the Company's core product offering.  Should these individuals leave the employ of the Company it would have a setback to its future development plans.  This setback would be overcome by hiring new senior developers that would have to become familiar with the Company's products.
- The Company is dependent on the continual growth of the Internet as an advertising medium for local advertisers.  Should this prove untrue the Company will have to assess other business strategies for selling promotional products to local advertisers.
- Technologies may change making the Company's products obsolete.  The Company is aware of changes in technology and is integrating new technologies into its product offerings to ensure that they do not become obsolete because of changing technology.

Item 7. Financial Statements

Selected Financial Data

The consolidated operating results and financial position of the Company are presented in the following tabulated format.  The selected financial data has been derived from our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP").  See Item 6 Management's Discussion and Analysis or Plan of Operation.  The following selected financial data is qualified in its entirety by, and should be read in conjunction with, the audited consolidated financial statements for the year ended June 30, 2003 and June 30, 2002.  All figures are presented in U.S. Currency, unless otherwise stated.

|                          | Fiscal Year Ended
June 30, 2003 | Fiscal Year Ended
June 30, 2002
|------------------------- | ------------------------------- | -------------------------------
|                          | $                               | $                              
|Revenue                   | 1,173,481                       | 414,530                        
|Cost of sales             | 467,841                         | 581,639                        
|Gross profit (loss)       | 705,640                         | (167,109)                      
|Operating expenses        | 1,542,075                       | 1,577,277                      
|Net loss for the year     | (1,124,582)                     | (1,829,444)                    
|Net loss per common share | (0.05)                          | (0.08)                         



|                                 | Fiscal Year Ended
June 30, 2003 | Fiscal Year Ended
June 30, 2002
|-------------------------------- | ------------------------------- | -------------------------------
|                                 | $                               | $                              
|Cash                             | 12,308                          | 82,974                         
|Total current assets             | 140,212                         | 106,682                        
|Total assets                     | 489,748                         | 358,548                        
|Total current liabilities        | 5,363,153                       | 1,269,765                      
|Obligations under capital leases | 47,773                          | 40,030                         
|Loan payable                     | 0                               | 0                              
|Loan debenture                   | 0                               | 3,000,000                      
|Deferred tax liabilities         | 0                               | 0                              
|Stockholders' equity (deficit)   | (4,921,178)                     | (3,951,247)                    
|Cash dividends                   | 0                               | 0                              

Item 8. Changes in and Disagreements with Accountants

On December 17, 2001, the Company filed a Form-8K regarding changing its independent chartered accountants replacing Ernst & Young LLP with Grant Thornton L.L.P.

During the Company's fiscal years ended June 30, 2000 and 2001 and during the interim period from July 1, 2001 to December 17, 2001,there were no disagreements between the Company and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope and procedures, which, if not resolved to the satisfaction of Ernst &
Young, would have caused Ernst & Young to make reference to the matter of the disagreement in its report.

Item 8A. Controls and Procedures

Within the 90 days prior to the date of filing this Annual Report on Form 10-KSB, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filings with the Securities and Exchange Commission.  Furthermore, with regard to the Company's internal controls, there have been no significant changes in the Company's internal controls or to the Company's knowledge in other factors that could significantly affect those internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses.

Management of the Company, including the Company's President and Chief Executive Officer and the Chief Financial Officer, does not expect that the Company's disclosure controls or internal controls will prevent or detect all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the reality of resource constraints; accordingly the benefits of controls must be considered relative their costs.

Part III

Item 9.  Directors, Executive Officers, Promoters and Significant Employees: Compliance with Section 16(a) of the Exchange Act.

Directors and Executive Officers

The following information sets forth-certain information concerning the executive officers and directors of the Company:





|Name and present office held                           | Director/Officer Employee since
|------------------------------------------------------ | -------------------------------
|Phil M. Dubois
President & CEO, Director               | January 27, 1999               
|Ken R. Bradley
Chief Operating Officer & CFO, Director | January 27, 1999               
|Ken Spencer
Chairman, Director                         | August 3, 1999                 
|Bob Smart (1)
Director                                 | August 25, 1999                
|Derek Mather
Director                                  | September 18, 2002             
|Bob Silver
Director                                    | January 3, 2003                
|Jim MacKay
Vice President Sales & Marketing            | April 17, 2000                 

Note (1): Bob Smart resigned as director from the Company's Board of Directors on September 23, 2003.

The following is a brief biography of each of the executive officers and directors listed above:

Phil M. Dubois, age 56, has served as President, CEO and a director of the Company since the acquisition of Xceedx on January 27, 1999.  From January 1996 to present, Mr. Dubois serves as President, CEO and a director of Xceedx a company he co-founded in 1996. Xceedx was a developer of eCommerce software solutions.  Since January 27, 1999, Mr. Dubois is also President, CEO and a director of WelcomeTo.  From September 1994 to December 1995, Mr. Dubois was an independent consultant providing consulting services to technology companies.  From May 1992 to August 1994, Mr. Dubois served as President and CEO of Modatech Systems Inc., a company in the North American sales force automation marketplace.  From May 1989 to May 1992, Mr. Dubois served as Vice President of Development of Modatech. From May 1989 to August 1994, Mr. Dubois was a director of Modatech. Mr. Dubois is the past chair of AceTech and a director of AceTech, a not-for-profit association of high tech CEOs.

Ken R. Bradley, age 56, and has served as Chief Operating Officer, CFO and a director of the Company since the acquisition of Xceedx on January 27, 1999.  From January 1996 to present, Mr. Bradley serves as Vice President Finance, Vice President of Operations and a director of Xceedx a company he co-founded in 1996. Since January 27, 1999, Mr. Bradley serves as Vice President Finance and director of WelcomeTo. From September 1994 to December 1995, Mr. Bradley was an independent consultant providing consulting services to technology companies. From September 1990 to August 1994, Mr. Bradley was Vice President Finance and Administration at Modatech Systems Inc., a company in the North American sales force automation marketplace. Mr. Bradley's past experience also includes serving as Regional Controller at Domtar Packaging, a national company involved in the manufacturing of corrugated containers. From February 1983 to January 1987, Mr. Bradley served as Manager of Finance and Administration at Mobile Data International Inc., a company that developed mobile data terminals that operated over radio frequency. Mr. Bradley is a Certified Management Accountant.

Jim MacKay, age 59, joined the Company in April 2000 as Vice President Sales & Marketing based in Denver Colorado. Prior to joining the Company, Mr. Mackay worked for First Union Management Inc., from January 1995 to January 2000, a company specializing in parking management with locations throughout Canada and the US. During this period, he held the positions of Vice President US Parking Operations, Vice President Western Region Imperial Parking division and Vice President Western Canada Region Imperial Parking division. From 1982 to 1994 Mr. MacKay worked for the "The Jim Pattison Group" holding various positions with the Group such as President of the Out of Home Media Group, President of Seaboard Advertising Company and President & General Manager CJJR-FM and CKBD-AM radio stations. Mr. MacKay has an MBA from Hamilton University.

Ken Spencer, age 58, and has served as Chairman and a director of the Company since August 3, 1999.  In 1983, Dr. Spencer co-founded Creo Products, a company that manufactures complex, high-value equipment utilizing precision mechanics, digital design, lasers, optics and software for the printing industry. He served as CEO of Creo Products from 1985 to 1995, and as Chairman of the Creo Products Board of Directors from 1985 to 1996.  Dr. Spencer remains a director of Creo Products.  Dr. Spencer also serves as a director of Science World, a government organization that promotes science and technology throughout the province of British Columbia, a position he has held since December, 1997.

Bob Smart, age 52, has served as a director since August 25, 1999. Mr. Smart has over 20 years of senior management experience in a variety of businesses.  He currently is a Partner in the consulting firm of Radford & Smart, a position he has held since February 1999. From June 1998 to February 1999, he served as Executive Vice President and a director of Bargain Castle International Discount Centres Ltd., a wholesale and retail products liquidator. From December 1997 to June 1998, Mr. Smart served as President of Webcastsystems Inc., a software developer.  From October 1996 to December 1997, he served as President of ActionView Advertising Ltd. an outdoor advertising media company.  From October 1994 to October 1996 Mr. Smart served as Vice President Corporate Development of Imperial Ginseng Products Ltd., a grower and distributor of ginseng and ginseng products.  Effective September 23, 2003, Mr. Smart has resigned as director from CityXpress Board of Directors.

Derek Mather, age 70, has for the past 5 years been President and CEO of Ventures Management Inc., which is active in various technology infrastructure initiatives such as AceTech and Science World. Mr. Mather's career included several years with the Investment Department of the Sun Life Assurance Co. followed by a career in venture capital, first with Canadian Enterprise Development Corp. (CED) which he helped create and then as founding President and CEO of Vencap Equities Alberta Ltd. While with CED, he was appointed President and CEO of Westmills Carpets Ltd., which he assisted to return to profitable operations. Mr. Mather's is a graduate in Business from McGill University.

Bob Silver, age 52, is president of The Silver Company, a Seattle-based public relations firm that specializes in developing and implementing national and international marketing communications programs for entrepreneurial high-growth companies. Prior to founding the agency in 1991, Silver spent 13 years as an award-winning reporter and editor for some of the nation's leading newspapers, including The St. Petersburg Times and The Seattle Times.

Directors are elected annually by the Company's shareholders and hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified, unless they resign or cease to be directors in accordance with the Company's Articles of Incorporation and Bylaws.  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.  The Company's Audit Committee is comprised of Derek Mather, Bob Smart and Bob Silver.  The Audit Committee is directed to review the scope, costs 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; and to report to the Board of Directors, when so requested, on any accounting or financial matters.  The Company's Compensation Committee is comprised of Ken Spencer and Derek Mather.  The role of this committee is to set executive compensation for the directors and senior executives and administer the Options Plan for executive officers and employees.

No director or executive officer is a party to any arrangement or understanding with any other person pursuant to which he was elected as a director or officer.  No director or executive officer has any family relationship with any other officer or director.

No officer or director has been involved in the past five years in any of the following: (1) bankruptcy proceedings; (2) subject to criminal proceedings or convicted of a criminal act; (3) subject to any order, or decree entered by any court limiting in any way his or her involvement in any type of business, securities or banking activities; or (4) subject to any order for violation of federal or state securities laws or commodities laws.

Item 10.  Remuneration of Directors and Executive Officers.

As of June 30, 2003, the Company's executive officers consisted of Phil M. Dubois, President and CEO, Ken R. Bradley, Chief Operating Officer and CFO and Jim MacKay, Vice President Sales & Marketing.

During the year ended June 30, 2003, salary compensation was paid to our executive officers.  The following table contains information concerning compensation paid to named executive officers for the fiscal years ended June 30, 2003, June 30, 2002 and June 30, 2001.

|SUMMARY COMPENSATION TABLE 
|---------------------------
|                           
|                           
|Name and
Principal Position
|Phil Dubois
President & CEO
|Ken Bradley
COO & CFO      
|Brent Forgeron VP (1)      
|Jim MacKay VP (2)          



Note (1): Mr. Forgeron ceased employment with the Company on September 5, 2000.

Note (2): Mr. MacKay commenced employment with the Company on April 17, 2000.

Stock Options

The following stock purchase options were granted by the Company during the fiscal years ended June 30, 2002 and June 30,2003.

On November 29, 2001, the Company granted 75,000 share purchase options to a consultant for services rendered.  These share purchase options are exercisable until November 30, 2004 at an exercise price of $0.25 per common share.

On November 29, 2001, 70,000 share purchase options to acquire common shares were granted to certain employees.  These share purchase options are exercisable until November 29, 2005 at an exercise price of $0.25 per common share.  The share purchase options become exercisable as to one-third of the option shares on November 29, 2002 and one-third on the second and third anniversaries of the date the share purchase options are granted, provided that the employee is employed by the Company on each anniversary date.  These share purchase options were granted under the Company's 1999 Stock Option Plan.

On June 28, 2002, 1,225,000 share purchase options to acquire common shares were granted to certain employees.  These share purchase options are exercisable until June 28, 2005 at an exercise price of $0.25 per common share.  The share purchase options become exercisable as to one-third of the option shares on June 28, 2003 and one-third on the second and third anniversaries of the date the share purchase options are granted, provided that the employee is employed by the Company on each anniversary date.  These share purchase options were granted under the Company's 1999 Stock Option Plan.

On January 30, 2003, 310,000 share purchase options to acquire common shares were granted to certain employees. These share purchase options are exercisable until January 30, 2006 at an exercise price of $0.25 per common share.  The share purchase options become exercisable as to one-third of the option shares on January 30, 2004 and one-third on the second and third anniversaries of the date the share purchase options are granted, provided that the employee is employed by the Company on each anniversary date.

As of June 30, 2003, 2,950,000 stock options are outstanding, which includes 350,000 stock options granted to Mr. Phil Dubois President & Chief Executive Officer and Mr. Ken Bradley Chief Operating Officer & Chief Financial Officer and 350,000 options granted to Mr. Jim MacKay VP Sales & Marketing. The details of the options are explained in Note 16(b) of the audited consolidated financials, which are enclosed.

The following table summarizes information concerning options granted to named executive officers and directors for the fiscal year ended June 30, 2003:



|OPTIONS / SAR GRANTS IN LAST FISCAL YEAR
|----------------------------------------
|Individual Grants                       
|Name                                    
|Phil Dubois                             
|Ken Bradley                             
|Jim MacKay                              
|Ken Spencer                             
|Bob Smart                               
|Derek Mather                            
|Bob Silver                              
|Total Granted                           



---

Note (2):Mr. Smart resigned as director from the Company's Board of Directors on September 23, 2003.

The following is a summary of the share purchase options exercised by the Company's directors and officers during the fiscal year ended June 30, 2003:

|AGGREGATED OPTION/SAR EXERCISES DURING THE LAST
FISCAL YEAR END AND FISCAL YEAR END OPTION/SAR VALUES
|-----------------------------------------------------------------------------------------------------
|Name                                                                                                 
|Exercisable                                                                                          
|Phil Dubois                                                                                          
|Ken Bradley                                                                                          
|Ken Spencer                                                                                          
|Bob Smart                                                                                            
|Derek Mather                                                                                         
|Bob Silver                                                                                           
|Jim MacKay                                                                                           
|Total                                                                                                

Note (1): There were no options granted by the Company to the directors and officers listed in this table during the year ended June 30, 2003.

Note (2): Mr. Smart resigned as director from the Company's Board of Directors on September 23, 2003.

The following is a summary of long-term incentive plans granted to the Company's directors and officers and during the fiscal year ended June 30, 2003:

|LONG-TERM INCENTIVE PLANS : AWARDS IN LAST FISCAL YEAR
|------------------------------------------------------
|Name                                                  
|Phil Dubois                                           
|Ken Bradley                                           
|Ken Spencer (1)                                       
|Bob Smart (1)                                         
|Derek Mather (1)                                      
|Bob Silver (1)                                        
|Jim MacKay                                            



Note (1):The Company has agreed to issue 198,587 common shares to directors and officers in this table during the year ended June 30, 2003.

Note (2): Mr. Smart resigned as director from the Company's Board of Directors on September 23, 2003.

Description of 1999 Stock Option Plan

The Company's 1999 Stock Option Plan (the "Stock Option Plan") was adopted by the Board of Directors and approved by the Company's shareholders on August 25, 1999.  The purpose of the Plan is to reward the contributions made to the Company by employees, directors and consultants, to provide such persons with additional incentive to devote themselves to the future success of the Company, and to improve the ability of the Company to attract, retain and motivate individuals upon whom the Company's sustained growth and financial success depend.  Pursuant to the Stock Option Plan, the Company may grant or issue stock options to directors, officers, advisors and employees of the Company or any other person or company engaged to provide ongoing services to the Company.  The Company reserved on August 25, 1999, 2,000,000 shares under the stock option.

The Board of Directors determines the terms and provisions of the stock options granted under the Stock Option Plan.  The Stock Option Plan may be amended at any time by the Board of Directors, although certain amendments may require shareholder approval.  On November 29, 2000, the Board of Directors amended the stock option plan to increase the number of common shares available for grant from 2,000,000 to 3,000,000 shares of common shares.  This amendment was approved by the shareholders at the Annual Meeting of shareholders held on November 29, 2000.  The Board of Directors may terminate the Stock Option Plan at any time.



Compensation of Directors

On April 17, 2003, the Company as agreed to issue 198,857 common shares to Directors in the following table as compensation and cancelled their previously issued stock options:

|Name         | Number of Shares
|------------ | ----------------
|Ken Spencer  | 85,263          
|Bob Smart    | 59,360          
|Derek Mather | 26,982          
|Bob Silver   | 26,982          
|Total        | 198,587         



Note (1): Mr. Smart resigned as director from the Company's Board of Directors on September 23, 2003.

Executive Officers Consulting Agreement

On January 21, 1999, the Company entered into separate Consulting Agreements with Phil Dubois and Ken Bradley, named executive officers of the Company.  Pursuant to these Consulting Agreements, Mr. Dubois and Mr. Bradley provide corporate financing and business strategy consulting services to and on behalf of the Company and each receive compensation of $6,000 Canadian per month.

On November 1, 2000, the Company increased compensation to $10,000 Canadian per month for both Mr. Dubois and Mr. Bradley.

Each consulting agreement is for a term of two years.  The Company may renew either or both of the consulting agreements for successive terms of a duration decided by the Company by written notice to the other party.  Absent agreement by the parties or notice by the Company, each of the Consulting Agreements automatically renews for a one-year term.  Each consulting agreement contains confidentiality and certain non-compete provisions.  Each consulting agreement provides that the Company determines what corporate benefit plans and programs Mr. Dubois or Mr. Bradley will participate in and the terms of such participation.

The Company has the right to terminate Mr. Dubois at any time for legal cause without notice or payment to him.  If the Company terminates the consulting agreement of Mr. Dubois without cause, the Company is obligated to pay him $12,000 Canadian for each month remaining in the term of the Consulting Agreement.

The Company has the right to terminate Mr. Bradley at any time for legal cause without notice or payment to him.  If the Company terminates the Consulting Agreement of Mr. Bradley without cause, the Company is obligated to pay him $12,000 Canadian for each month remaining in the term of the Consulting Agreement.

Either Mr. Dubois or Mr. Bradley may terminate his Consulting Agreement on three- (3) month's prior notice to the Company.

On December 31, 2000, the consulting agreements with Phil Dubois and Ken Bradley were not renewed.  Subsequently, on January 1, 2001, Mr. Dubois and Mr. Bradley became fulltime employees of the Company and each receives compensation of $10,000 Canadian per month.

Item 11.  Security Ownership of Management and Certain Securityholder

Security Ownership of Management and Certain Beneficial Owners

The following table sets forth certain information concerning the number of shares of the Company's common stock owned beneficially as of September 25, 2003 by (i) each of the Company's directors; (ii) each of the Company's named executive officers; and (iii) all directors and executive officers of the Company as a group; and (iv) each person (including any group) known to us to own more than five percent (5%) of any class of voting securities of the Company.  Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.

|Title of Class                            | Name and Address of Beneficial Owner                           | Amount and Nature of Beneficial Ownership | Percentage of Class (8)
|----------------------------------------- | -------------------------------------------------------------- | ----------------------------------------- | -----------------------
|Common Shares                             | Phil Dubois
Suite 200
1727 West Broadway
Vancouver, BC V6J 4W6 | 4,585,032 (1),(7),(11)                    | 17.3% (8)              
|Common Shares                             | Ken Bradley
Suite 200
1727 West Broadway
Vancouver, BC V6J 4W6 | 4,623,881 (2),(7),(12)                    | 17.4% (8)              
|Common Shares                             | Brent Forgeron
23-1243 Thurlow Street
Vancouver, BC V6E 1X4    | 875,000 (9)                               | 3.6% (8)               
|Common Shares                             | Ken Spencer
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6  | 1,960,743 (3),(7),(10),(13)               | 7.7% (8)               
|Common Shares                             | Jim MacKay
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6   | 350,000 (4)                               | 1.4% (8)               
|Common Shares                             | Bob Smart
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6    | 84,360 (5),(14),(17)                      | 0.3% (8)               
|Common Shares                             | Derek Mather
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6 | 76,982 (15)                               | 0.3% (8)               
|Common Shares                             | Bob Silver
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6   | 26,982 (16)                               | 0.1% (8)               
|Common Shares                             | Ian Thomas
Suite 200
1727 West Broadway
Vancouver BC V6J 4W6   | 25,000 (6)                                | 0.1% (8)               
|All officers and directors as a group (9) | 12,607,980                                                     | 38.5% (8)                                

1. Includes 71,000 shares of common stock owned by Mr. Dubois's wife. Also includes 555,800 shares of common stock, which may be purchased pursuant to warrants granted by the Company.
2. Includes 71,000 shares of common stock owned by Mr. Bradley's wife. Also includes 595,800 shares of common stock, which may be purchased pursuant to warrants granted by the Company.
3. Includes 795,240 shares of common stock that may be purchased pursuant to warrants granted by the Company. These warrants were purchased by him from the Company in two private placements.
4. Includes 350,000 shares of common stock, which may be purchased pursuant to options granted by the Company.
5. Includes 25,000 shares of common stock, which may be purchased pursuant to options granted by the Company.
6. Includes 25,000 shares of common stock which may be purchased pursuant to options granted by the Company
7. Certain of these shares are subject to transfer restrictions.
8. The percentages in this table are based on a total number of outstanding common shares at September 25, 2003 of 24,520,033 plus it assumes the warrants or options granted to each director or executive officer has been 100% exercised by them.  Therefore each executive officer or directors percentage has been adjusted by their specific option or warrants grants.  If all the options and warrants granted to executive officers and directors were exercised the total outstanding common shares would be 32,793,624.
9. Mr. Forgeron ceased employment with the Company on September 5, 2000.
10. Includes 35,000 shares of common stock, which may be purchased pursuant to options granted by the Company.
11. Includes 350,000 shares of common stock, which may be purchased pursuant to options granted by the Company.
12. Includes 350,000 shares of common stock, which may be purchased pursuant to options granted by the Company.
13. Includes 85,263 shares of common stock to be issued by the Company.
14. Includes 59,360 shares of commons stock to be issued by the Company.
15. Includes 26,982 shares of commons stock to be issued by the Company.
16. Includes 26,982 shares of commons stock to be issued by the Company.
17. Mr. Smart resigned as director from the Company's Board of Directors on September 23, 2003.

Should Lee convert their $3,300,000 of convertible debenture to common stock of the Company it would own 17,129,701 common shares in the Company, which would represent a percentage ownership of 41.1%.  This percentage ownership is based on outstanding shares of 41,649,734.

Item 12.  Interest of Management and others in Certain Transactions.

General

Pursuant to a share purchase agreement dated January 7, 1999, the shareholders of WelcomeTo sold their 100% interest in WelcomeTo to CityXpress for 8,510,000 shares in CityXpress which represented a controlling interest of approximately 62.5%.  For accounting purposes this transaction was considered the recapitization of WelcomeTo and the acquisition of CityXpress by WelcomeTo. For a more detailed description of this transaction see Item 1 "Description of Business - Corporate History".

On January 27, 1999, CityXpress acquired all of the issued and outstanding shares of Xceedx by exchanging one share of CityXpress for each share of common stock of Xceedx.  As a result CityXpress issued 6,250,000 shares of common stock in a private offering under section 4(2) of the Securities Act.  For a more detailed description of this transaction see Item 1 "Description of Business - Corporate History".

The following table details the number of shares issued to the following executive officers resulting from theses two purchase agreements:

|Name           | Acquisition date | Company             | Number of Shares
|-------------- | ---------------- | ------------------- | ----------------
|Phil Dubois    | January 27, 1999 | Xceedx Technologies | 2,561,250       
|Ken Bradley    | January 27, 1999 | Xceedx Technologies | 2,561,250       
|Brent Forgeron | January 07, 1999 | WelcomeTo Search    | 1,130,000       

Except for (a) the issuance of shares of its stock to Mr. Forgeron pursuant to the Acquisition Agreement between WelcomeTo Search Engine, Inc. and the Company and the issuance of shares of its stock to Messrs. Dubois and Bradley pursuant to the Acquisition Agreement between Xceedx Technologies, Inc. and the Company, (b) the compensation described herein, and (c) advances to and by certain officers to cover expenses, all of which were reimbursed or repaid without interest, no director, executive officer, holder of ten percent of the Company's outstanding common stock, or any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of the Company, to the Company's knowledge, had a material interest either direct or indirect, in any particular transaction or series of transactions to which the Company or any subsidiary was a party, during the two fiscal years ended June 30, 2002 and June 30, 2001.

Shareholder Loans

The Company entered into unsecured shareholder loan agreements with Mr. Phil Dubois, the Company's President & CEO and Mr. Ken Bradley, Chief Operating Officer & CFO.  As of June 30, 2003, the installment and demand shareholder loans have various interest rates attached to them as detailed below:

|Name                    | Loan Description                                | Annual Interest
Rate at June 30, 2003                    | Outstanding Amount
|----------------------- | ----------------------------------------------- | -------------------------------------------------------- | ------------------
|Phil Dubois             | Loan payable equal monthly installments of $725 | North Shore Credit Union Mortgage interest rate of 4.55% | $128,726          
|Phil Dubois             | Loan payable equal monthly installments of $734 | North Shore Credit Union Mortgage interest rate of 4.55% | $125,231          
|Phil Dubois             | Loan payable on demand                          | CIBC Visa interest rate of 19.50%                        | $12,742           
|Phil Dubois             | Loan payable on demand                          | CIBC Line interest rate of 8.00%                         | $13,602           
|Phil Dubois             | Loan payable on demand                          | CIBC Line interest rate of 9.50%                         | $10,083           
|Phil Dubois             | Loan payable on demand                          | North Shore Credit Union line interest rate of 8.75%     | $6,762            
|Total Phil Dubois       |                                                 |                                                          | $297,146          
|Ken Bradley             | Loan payable equal monthly installments of $725 | North Shore Credit Union Mortgage interest rate of 4.55% | $128,726          
|Ken Bradley             | Loan payable equal monthly installments of $734 | North Shore Credit Union Mortgage interest rate of 4.55% | $125,231          
|Ken Bradley             | Loan payable on demand                          | TD Bank select line interest rate of 7.75%               | $36,334           
|Ken Bradley             | Loan payable on demand                          | Interest rate of 4.50%                                   | $14,100           
|Ken Bradley             | Loan payable on demand                          | CIBC Line interest rate of 8.50%                         | $10,405           
|Total Ken Bradley       |                                                 |                                                          | $314,796          
|Total Shareholder Loans |                                                 | $611,942                                                

Executive Officer Stock Purchase Warrants

On June 13, 2000, the Company granted 541,600 stock purchase warrants to two of the Company's executive officers as consideration for their guarantee of the demand installment loan with the CIBC bank and for two shareholder loans totaling $168,600.

On November 10, 2000, the Company granted additional 200,000 stock purchase warrants to two of the Company's executive officers as consideration for two shareholder loans to the Company totaling $83,400

On June 26, 2001, the Company granted 160,000 stock purchase warrants to two of the Company's executive officers as consideration for their additional two shareholder loans totaling $66,028.

On March 3, 2003, the Company granted 1,310,626 stock purchase warrants to two of the Company's executive officers as consideration for their additional two shareholder loans totaling $259,740.

On June 16, 2003, the Company granted 782,187 warrants to two of the Company's officers, as consideration for their additional stockholders' loans totaling $140,793.

The details of the stock purchase warrants are listed below as of June 30, 2003:

|Name        | Warrant Grant Date | Warrant Price
$US | Warrant Grant Amount | Warrant Expiry
Date
|----------- | ------------------ | ----------------- | -------------------- | -------------------
|Phil Dubois | June 13, 2000      | $0.25             | 270,800              | June 13, 2005      
|Phil Dubois | January 31, 2000   | $0.25             | 125,000              | January 31, 2005   
|Phil Dubois | November 10, 2000  | $0.25             | 80,000               | November 10, 2005  
|Phil Dubois | June 26, 2001      | $0.25             | 80,000               | June 26, 2006      
|Phil Dubois | March 3, 2003      | $0.18             | 655,313              | March 3, 2006      
|Phil Dubois | June 16, 2003      | $0.18             | 391,669              | June 16, 2006      
|Ken Bradley | June 13, 2000      | $0.25             | 270,800              | June 13, 2005      
|Ken Bradley | January 31, 2000   | $0.25             | 125,000              | January 31, 2005   
|Ken Bradley | November 10, 2000  | $0.25             | 120,000              | November 10, 2005  
|Ken Bradley | June 26, 2001      | $0.25             | 80,000               | June 26, 2006      
|Ken Bradley | March 3, 2003      | $0.18             | 655,313              | March 3, 2006      
|Ken Bradley | June 16, 2003      | $0.18             | 390,518              | June 16, 2006      
|Total       |                    |                   | 3,244,413            |                    

Item 13.  Compliance with Section 16(a) of the Exchange Act.

During the year ended June 30, 2003, Form 3's and Form 4's for Mr. Dubois, Mr. Bradley, Mr. Mather and Mr. Silver were not timely filed.

Item 14.  Reports on Form 8-K.

On June 17, 2002, the Company filed a Form 8-K Item 5 announcing the signing of a non-binding offer to acquire the business and other assets of 10digit Communications.

On July 10, 2002, the Company filed a Form 8-K Item 2 announcing the completion of its acquisition of the online auction business and related assets of 10digit Communications.





SIGNATURES

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

CityXpress Corp

|Date: October 10, 2003 | By: | /s/ Ken Bradley                
|---------------------- | --- | -------------------------------
|                       |     | Signature                      
|                       |     | Ken Bradley                    
|                       |     | Chief Operating Officer and CFO

Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|/s/ Phil Dubois  | Director, President and CEO             | September 25, 2003
|---------------- | --------------------------------------- | ------------------
|/s/ Ken Bradley  | Director, Chief Operating Officer & CFO | September 25, 2003
|/s/ Ken Spencer  | Director                                | September 25, 2003
|/s/ Derek Mather | Director                                | September 25, 2003
|/s/ Bob Silver   | Director                                | September 25, 2003



CERTIFICATION

I, Phil Dubois, certify that:

1.  I have reviewed this annual report on Form 10-KSB of CityXpress Corp.;

2.  Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.  Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: October 10, 2003



|/s/ Phil Dubois
|---------------
|[Signature]    
|President & CEO



CERTIFICATION

I, Ken Bradley, certify that:

1.  I have reviewed this annual report on Form 10-KSB of CityXpress Corp.;

2.  Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.  Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: October 10, 2003



|/s/ Ken Bradley                                  
|-------------------------------------------------
|[Signature]                                      
|Chief Financial Officer & Chief Operating Officer



Part F/S

Financial Statements



Audited Consolidated Financial Statements of CityXpress Corp as at June 30, 2003.

CityXpress Corp.



Audited Consolidated Financial Statements



(Expressed in U.S. dollars)

June 30, 2003 and 2002



Grant Thornton LLP

Chartered Accountants

Management Consultants

Canadian Member of Grant Thornton International

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of CityXpress Corp.

We have audited the accompanying consolidated balance sheets of CityXpress Corp. as of June 30, 2003 and 2002, and the related consolidated statements of operations, stockholders' deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of CityXpress Corp. at June 30, 2003 and 2002 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and has a working capital deficiency. The Company is dependent on its ability to raise capital from shareholders or other sources to sustain operations. These factors, along with other matters set out in Note 1, raise substantial doubt that the Company will be able to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

|Vancouver, Canada | /s/ Grant Thornton LLP
|----------------- | ----------------------
|August 15, 2003   | Chartered Accountants 



CONSOLIDATED BALANCE SHEETS

[See Nature of Operations and Basis of Presentation - Note 1] (Expressed in U.S. dollars)

|As at June 30                                                                                                                                                                                                                                                                      | 2003                     | 2002                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ---------------------
|                                                                                                                                                                                                                                                                                   | $                        | $                    
|ASSETS [note 11]                                                                                                                                                                                                                                                                   |                          |                      
|Current                                                                                                                                                                                                                                                                            |                          |                      
|Cash and cash equivalents                                                                                                                                                                                                                                                          | 12,308                   | 82,974               
|Accounts receivable, net of allowance for doubtful accounts
of $Nil in 2003 and 2002 [note 4]                                                                                                                                                                                      | 94,169                   | 3,091                
|Other receivables                                                                                                                                                                                                                                                                  | 7,132                    | 4,288                
|Prepaid expenses and other                                                                                                                                                                                                                                                         | 26,603                   | 16,329               
|Total current assets                                                                                                                                                                                                                                                               | 140,212                  | 106,682              
|                                                                                                                                                                                                                                                                                   |                          |                      
|Property and equipment [note 5]                                                                                                                                                                                                                                                    | 124,465                  | 102,232              
|Product development costs [note 6]                                                                                                                                                                                                                                                 | 171,579                  | 149,634              
|Intangible assets [note 7]                                                                                                                                                                                                                                                         | 53,492                   | NIL                  
|Total assets                                                                                                                                                                                                                                                                       | 489,748                  | 358,548              
|                                                                                                                                                                                                                                                                                   |                          |                      
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                               |                          |                      
|Current                                                                                                                                                                                                                                                                            |                          |                      
|Accounts payable [note 8]                                                                                                                                                                                                                                                          | 291,423                  | 209,200              
|Accrued liabilities [note 8]                                                                                                                                                                                                                                                       | 421,423                  | 244,196              
|Deferred revenue                                                                                                                                                                                                                                                                   | 250,763                  | 11,266               
|Revolving loan [note 9]                                                                                                                                                                                                                                                            | 66,790                   | NIL                  
|Current portion of loans payable [note 10]                                                                                                                                                                                                                                         | 350,000                  | 350,000              
|Convertible loan debentures [note 11]                                                                                                                                                                                                                                              | 3,300,000                | NIL                  
|Demand instalment loan [note 12]                                                                                                                                                                                                                                                   | NIL                      | 152,910              
|Stockholders' loans [note 13]                                                                                                                                                                                                                                                      | 611,942                  | 272,836              
|Current portion of obligations under capital leases [note 14]                                                                                                                                                                                                                      | 70,812                   | 29,357               
|Total current liabilities                                                                                                                                                                                                                                                          | 5,363,153                | 1,269,765            
|                                                                                                                                                                                                                                                                                   |                          |                      
|Obligations under capital leases [note 14]                                                                                                                                                                                                                                         | 47,773                   | 40,030               
|Convertible loan debentures [note 11]                                                                                                                                                                                                                                              | NIL                      | 3,000,000            
|Total liabilities                                                                                                                                                                                                                                                                  | 5,410,926                | 4,309,795            
|Commitments [note 15]                                                                                                                                                                                                                                                              |                          |                      
|                                                                                                                                                                                                                                                                                   |                          |                      
|Stockholders' deficiency                                                                                                                                                                                                                                                           |                          |                      
|Share capital [note 16]
Common stock - $0.001 par value
Authorized shares: 100,000,000
Issued and outstanding: 24,520,033 at June 30, 2003
and 23,303,898 at June 30, 2002
Common stock to be issued: 198,587 at June 30, 2003
and Nil at June 30, 2002
Additional paid in capital | 24,520

12,650
5,984,090 | 23,304

NIL
5,843,305
|Accumulated other comprehensive income                                                                                                                                                                                                                                             | 19,625                   | 19,625               
|Deficit                                                                                                                                                                                                                                                                            | (10,962,063)             | (9,837,481)          
|Total stockholders' deficiency                                                                                                                                                                                                                                                     | (4,921,178)              | (3,951,247)          
|Total liabilities and stockholders' equity                                                                                                                                                                                                                                         | 489,748                  | 358,548              

See accompanying notes







CONSOLIDATED STATEMENTS OF OPERATIONS

[See Nature of Operations and Basis of Presentation - Note 1] (Expressed in U.S. dollars)



|Years ended June 30                                                                            | 2003        | 2002       
|---------------------------------------------------------------------------------------------- | ----------- | -----------
|                                                                                               | $           | $          
|Revenue [note 4]                                                                               |             |            
|Auctions                                                                                       | 784,963     | 66,200     
|Special Sections                                                                               | 388,518     | 348,330    
|Total revenues                                                                                 | 1,173,481   | 414,530    
|Cost of sales (including amortization of product development costs of $99,749, 2002 - $55,187) | 467,841     | 581,639    
|Gross profit (loss)                                                                            | 705,640     | (167,109)  
|                                                                                               |             |            
|Operating expenses                                                                             |             |            
|Sales and marketing                                                                            | 552,770     | 439,882    
|Product development and technology                                                             | 410,919     | 382,186    
|Finance and administration                                                                     | 578,386     | 479,875    
|Amortization of eCommerce technology                                                           | NIL         | 275,334    
|                                                                                               | 1,542,075   | 1,577,277  
|Operating loss                                                                                 | (836,435)   | (1,744,386)
|Other income (expense)                                                                         |             |            
|Interest expense                                                                               | (173,261)   | (165,467)  
|Interest and miscellaneous income                                                              | 63          | 78         
|Foreign exchange loss                                                                          | (114,949)   | (12,769)   
|Total other expense                                                                            | (288,147)   | (178,158)  
|Loss before income taxes                                                                       | (1,124,582) | (1,922,544)
|Deferred income tax recovery [note 17]                                                         | NIL         | 93,100     
|Net loss and comprehensive loss for the year                                                   | (1,124,582) | (1,829,444)
|                                                                                               |             |            
|Net loss per common share [note 16(d)]                                                         |             |            
|Basic and diluted                                                                              | (0.05)      | (0.08)     
|Weighted average number of common shares [note 16(d)]                                          |             |            
|Basic and diluted                                                                              | 24,194,083  | 23,222,231 

See accompanying notes



CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

[See Nature of Operations and Basis of Presentation - Note 1] (Expressed in U.S. dollars)



|                                                          | Common stock
# | Common stock to be issued
# | Common stock issued and outstanding
$ | Common stock to be issued
$ | Additional paid in capital
$ | Accumulated other comprehensive income
$ | Deficit
$    | Total stockholders' equity (deficit)
$
|--------------------------------------------------------- | -------------- | --------------------------- | ------------------------------------- | --------------------------- | ---------------------------- | ---------------------------------------- | ------------ | --------------------------------------
|Year ended
June 30, 2002                                  |                |                             |                                       |                             |                              |                                          |              |                                       
|Balance at
June 30, 2001                                  | 23,043,898     | NIL                         | 23,044                                | NIL                         | 5,803,315                    | 19,625                                   | (8,008,037)  | (2,152,053)                           
|Shares issued on exercise of warrants                     | 100,000        | NIL                         | 100                                   | NIL                         | 24,900                       | NIL                                      | NIL          | 25,000                                
|Shares issued for services rendered                       | 160,000        | NIL                         | 160                                   | NIL                         | 4,640                        | NIL                                      | NIL          | 4,800                                 
|Stock based compensation                                  | NIL            | NIL                         | NIL                                   | NIL                         | 450                          | NIL                                      | NIL          | 450                                   
|Net loss for the year                                     | NIL            | NIL                         | NIL                                   | NIL                         | NIL                          | NIL                                      | (1,829,444)  | (1,829,444)                           
|Balance at
June 30, 2002                                  | 23,303,898     | NIL                         | 23,304                                | NIL                         | 5,843,305                    | 19,625                                   | (9,837,481)  | (3,951,247)                           
|                                                          |                |                             |                                       |                             |                              |                                          |              |                                       
|Acquisition of 10digit Communications
[notes 7 and 16(a)] | 1,216,135      | NIL                         | 1,216                                 | NIL                         | 60,141                       | NIL                                      | NIL          | 61,357                                
|Shares to be issued
[note 16(a)]                          | NIL            | 198,587                     | NIL                                   | 12,650                      | NIL                          | NIL                                      | NIL          | 12,650                                
|Stock based compensation [note 13(b)(iii) and iv)]        | NIL            | NIL                         | NIL                                   | NIL                         | 80,644                       | NIL                                      | NIL          | 80,644                                
|Net loss for the year                                     | NIL            | NIL                         | NIL                                   | NIL                         | NIL                          | NIL                                      | (1,124,582)  | (1,124,582)                           
|Balance at
June 30, 2003                                  | 24,520,033     | 198,587                     | 24,520                                | 12,650                      | 5,984,090                    | 19,625                                   | (10,962,063) | (4,921,178)                           

See accompanying notes





CONSOLIDATED STATEMENTS OF CASH FLOWS

[See Nature of Operations and Basis of Presentation - Note 1] (Expressed in U.S. dollars)



|Years ended June 30                                                         | 2003        | 2002       
|--------------------------------------------------------------------------- | ----------- | -----------
|                                                                            | $           | $          
|OPERATING ACTIVITIES                                                        |             |            
|Net loss for the period                                                     | (1,124,582) | (1,829,444)
|Adjustments to reconcile net loss to net cash used in operating activities: |             |            
|Amortization                                                                | 21,450      | 275,334    
|Depreciation                                                                | 178,694     | 110,851    
|Shares to be issued for services rendered                                   | 12,650      | NIL        
|Shares issued for services rendered                                         | NIL         | 4,800      
|Stock based compensation                                                    | 80,644      | 450        
|Deferred income tax recovery                                                | NIL         | (93,100)   
|Deferred revenue                                                            | 239,497     | 10,752     
|Changes in operating assets and liabilities:                                |             |            
|Accounts receivable                                                         | (91,078)    | 15,996     
|Other receivables                                                           | (2,844)     | 2,904      
|Prepaid expenses and other                                                  | (10,274)    | 7,318      
|Accounts payable                                                            | 82,223      | 50,259     
|Accrued liabilities                                                         | 177,227     | 107,231    
|Net cash used in operating activities                                       | (436,393)   | (1,336,649)
|                                                                            |             |            
|INVESTING ACTIVITIES                                                        |             |            
|10digit Communications acquisition [note 7]                                 | (13,585)    | NIL        
|Purchase of property and equipment                                          | (12,292)    | (8,964)    
|Development costs                                                           | (121,694)   | (122,886)  
|Net cash used in investing activities                                       | (147,571)   | (131,850)  
|                                                                            |             |            
|FINANCING ACTIVITIES                                                        |             |            
|Proceeds from revolving loan                                                | 66,790      | NIL        
|Proceeds from loans payable                                                 | NIL         | 60,000     
|Proceeds from convertible loan debentures                                   | 300,000     | 1,500,000  
|Repayment of demand instalment loan                                         | (152,910)   | (8,920)    
|Repayments under capital leases                                             | (39,688)    | (20,471)   
|Proceeds from stockholders' loans                                           | 284,172     | NIL        
|Repayment of shareholders' loans                                            | (9,856)     | (11,410)   
|Net cash provided by financing activities                                   | 448,508     | 1,519,199  
|Effect of foreign exchange rate changes on cash                             | 64,790      | NIL        
|                                                                            |             |            
|Net increase (decrease) in cash and cash equivalents during the year        | (70,766)    | 50,700     
|Cash and cash equivalents, beginning of year                                | 82,974      | 32,274     
|Cash and cash equivalents, end of year                                      | 12,308      | 82,974     
|                                                                            |             |            
|Non cash financing and investing transactions not included in cash flows:   |             |            
|Settlement of accounts payable through issuance of shares                   | NIL         | 25,000     
|Capital assets acquired through assumption of capital leases                | 88,886      | 31,689     
|Shares issued to acquire 10digit Communications [note 4]                    | 61,357      | NIL        
|                                                                            |             |            
|Supplemental disclosure                                                     |             |            
|Interest paid                                                               | 47,535      | 50,265     

See accompanying notes



1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

CityXpress Corp. ("Company") is incorporated under the laws of the State of Florida.

The Company has developed a suite of online products that provide newspapers with solutions through which they can defend and extend their position as the dominant means for local advertisers to promote themselves to local consumers.  The Company's online special section product integrates niche editorial content with advertising and promotional tools that leverage a newspaper's brand and traffic.  The Company's auction product allows newspapers to auction advertising clients' products in exchange for advertising credits with the newspaper, with the newspaper retaining the cash from all products that are sold in the auction.  The Company intends to build further alliances with media companies who own newspaper and television stations.  The Company currently operates in only one industry segment and its marketing efforts are currently targeted to the North American market.

The consolidated financial statements for the year ended June 30, 2003 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business for the foreseeable future.  The Company incurred a net loss of $1,124,582 for the year ended June 30, 2003 and has a working capital deficiency of $5,222,941 and an accumulated deficit of $10,962,063 at June 30, 2003.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent upon its ability to achieve profitable operations and to obtain additional capital.  Management expects to raise additional capital through private placements and other types of venture fundings and through financing agreements with its clients.  Also, management expects to generate higher revenues over the 2004 fiscal year.  The outcome of these matters cannot be predicted at this time.  No assurances can be given that the Company will be successful in raising sufficient additional capital or increasing revenues.  Further, there can be no assurance, assuming the Company successfully raises additional funds or increases revenues, that the Company will achieve positive cash flow.  If the Company is unable to obtain adequate additional financing or additional revenues, management will be required to curtail the Company's operating expenses.  These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities which might be necessary should the Company be unable to continue in business.



2. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America.  The Company's significant accounting policies are summarized below:

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from these estimates.

Principles of consolidation

The consolidated financial statements include the accounts of CityXpress Corp. and its wholly-owned subsidiaries: WelcomeTo Search Engine Inc. (British Columbia, Canada) and Xceedx Technologies Inc. (British Columbia, Canada).  All significant intercompany balances and transactions have been eliminated on consolidation.

Cash equivalents

The Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents.  Cash equivalents are recorded at cost, which approximates market value.

Leases

Leases are classified as either capital or operating leases.  Leases which transfer substantially all the benefits and risks of ownership of the property to the Company are accounted for as capital leases.  Capital lease obligations reflect the present value of future lease payments, discounted at the appropriate interest rate.  All other leases are accounted for as operating leases whereby rental payments are expensed as incurred.

Property and equipment

Property and equipment are recorded at cost.  Depreciation is computed on the straight-line method over the estimated useful life of the assets as follows:

|Computer equipment and software: | 3 years   
|-------------------------------- | ----------
|Office furniture and equipment:  | 5 years   
|Leasehold improvements:          | Lease term

Computer equipment acquired under capital leases is also depreciated on the straight-line method over the shorter of the lease term and the estimated useful life on the asset.

Product development costs

Product development costs incurred after technological feasibility of a product has been established are capitalized until the developed product is available for general release.

Product development costs are amortized on the straight-line method over a 3-year period.

Intangible assets

Intangible assets arose as part of the acquisition of 10digit Communications and is being amortized on the straight-line method over its useful life, which is 36 months.

The estimated amortization expense related to the Company's intangible assets over the next five years is:



|2004 | $24,981
|---- | -------
|2005 | $24,981
|2006 | $3,530 
|2007 | $ Nil  
|2008 | $ Nil  

Website development costs

Website development costs are charged to expense as incurred unless the development costs meet the criteria under generally accepted accounting principles for deferral and amortization.  The Company has not deferred any website development costs to date.

Impairment of long-lived assets

The Company monitors the recoverability of long-lived assets, including capital and intangible assets, based upon estimates using factors such as future asset utilization, business climate and future non-discounted cash flows expected to result from the use of the related assets or to be realized on sale.  The Company's policy is to write down assets to their fair value in the year when it is determined likely that the carrying amount of the asset will not be recovered.

Stock-based compensation

The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" for stock options granted to employees.

Stock options granted to non-employees are accounted for under SFAS No. 123 using the fair value method.  Compensation expense is calculated using the Black Scholes option pricing model and recorded over the period the services are rendered.

Stock options

The weighted average fair value of options granted during the year ended June 30 was as follows:

|                               |  | Options
# | Weighted average fair value
$
|------------------------------ |  | --------- | -----------------------------
|2003                           |  |           |                              
|Exercise price:                |  |           |                              
|Greater than fair market value |  | 310,000   | 0.10                         
|                               |  | 310,000   | 0.10                         
|                               |  |           |                              
|2002                           |  |           |                              
|Exercise price:                |  |           |                              
|Greater than fair market value |  | 1,370,000 | 0.05                         
|                               |  | 1,370,000 | 0.05                         

Pro forma information regarding net income and earnings per share is required by Statement of Financial Accounting Standard ("SFAS") No. 123, which also requires that the information be determined as if the Company had accounted for its employee stock options under the fair value method of that statement.  The fair value of each option granted during the year was estimated at the date of grant using the Black-Scholes pricing model with the following weighted average assumptions: risk free interest rates of 5% [2001 - 5%]; dividend yields of Nil; volatility factors of the expected market price of the Company's common stock of 140% [2002 - 170%] and a weighted average expected life of the option of 4.00 years [2002 - 2.79 years].



For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the vesting period.  The Company's pro forma information for the year ended June 30, is as follows:

|                                                       |             | 2003
$      | 2002
$     
|------------------------------------------------------ | ----------- | ----------- | -----------
|                                                       |             |             |            
|Net Loss                                               | As reported | (1,124,582) | (1,829,444)
|SFAS 123 compensation expense                          | Pro forma   | (31,000)    | (49,700)   
|Pro forma net loss attributable to common stockholders | Pro forma   | (1,155,582) | (1,879,144)
|Weighted average number of common shares outstanding   |             | 24,194,083  | 23,222,231 
|                                                       |             |             |            
|Pro forma net loss per common share:                   |             |             |            
|Basic and diluted                                      | Pro forma   | (0.05)      | (0.08)     

Capital stock issued for consideration other than cash

Capital stock issued for consideration other than cash is recorded at an estimate of the fair value of the stock issued or issuable or at an estimate of the fair value of the goods or services received (whichever is more readily ascertainable).

Foreign currency translation

Until March 31, 2000, the functional currency of the Company was the Canadian dollar, while the reporting currency in the consolidated financial statements was the U.S. dollar.  Consolidated asset and liability accounts were translated into U.S. dollars at the exchange rate in effect at the balance sheet date.  Consolidated revenue and expense amounts were translated at the average exchange rate for the period. Gains or losses resulting from this process were recorded in stockholders' equity as an adjustment to accumulated other comprehensive income.

Effective April 1, 2000, the functional currency of the Company and its subsidiaries changed to the U.S. dollar.  Accordingly, for the Canadian subsidiaries, monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing at the historic rate.  Revenue and expenses are translated at the average exchange rate for the year.  Gains or losses arising on this foreign currency translation are recorded in income.

Revenue recognition

The Company enters into sales contracts that may encompass multiple elements, including advertising and promotional fees, editorial content fees, training fees, custom development fees and auction fees.  Revenue for the various elements are allocated based on their relative fair value.  Advertising and promotional, and editorial content fees are recognized monthly as the services are performed.  Custom development fees are recognized when the client's web site is activated for the World Wide Web, at which time the Company retains no material conditions or obligations to the customer.  Training fees are recognized as the services are performed.  Cash received in advance of services rendered is recorded as deferred revenue.

Auction fees are recognized on completion of the auction per customer newspaper.  The Company receives a unit fee per auction article and a percentage of total auction revenue received by the newspaper

Allowance for doubtful accounts

The Company establishes an allowance for doubtful accounts through review of open accounts, and historical collection and allowances amounts.  The allowance for doubtful accounts is intended to reduce trade accounts receivable to the amount that reasonably approximates their fair value due to their short-term nature.  The amount ultimately realized from trade accounts receivable may differ from the amount estimated in the financial statements based on collection experience and actual returns and allowances.

Advertising costs

Advertising costs are expensed as incurred and amounted to $53,471 in the year ended June 30, 2003 [2002 - $58,398].

Income taxes

The Company uses the liability method of accounting for income taxes.  Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.  Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not of realization in future periods.

Loss per common share

The basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the year.  Diluted loss per common share is computed giving effect to all potential dilutive options and warrants that were outstanding during the year.  For the years ended June 30, 2003 and 2002, all outstanding options and warrants were anti-dilutive.

Recent pronouncements

Accounting for Costs Associated with Exit or Disposal Activities

In June 2002, the FASB issued Statement 146, Accounting for Costs Associated with Exit or Disposal Activities.  This statement requires entities to recognize costs associated with exit or disposal activities when liabilities are incurred rather than when the entity commits to an exit or disposal plan, as currently required.  Examples of costs covered by this guidance include one-time employee termination benefits, costs to terminate contracts other than capital leases, costs to consolidate facilities or relocate employees, and certain other exit or disposal activities.  This statement is effective for fiscal years beginning after December 31, 2002, and will impact any exit or disposal activities the Company initiates after that date.

Stock-Based Employee Compensation

In December 2002, the FASB issued Statement 148 (SFAS 148), Accounting for Stock-Based Compensation - Transition and Disclosure: an amendment of FASB Statement 123 (SFAS 123), to provide alternative transition methods for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in annual financial statements about the method of accounting for stock-based employee compensation and the pro forma effect on reported results of applying the fair value based method for entities that use the intrinsic value method of accounting.  The pro forma effect disclosures are also required to be prominently disclosed in interim period financial statements.  This statement is effective for financial statements for fiscal years ending after December 15, 2002 and is effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002, with earlier application permitted.  The Company does not plan a change to the fair value based method of accounting for stock-based employee compensation and has included the disclosure requirements of SFAS 148 in the accompanying financial statements

Accounting for Guarantees



In November 2002, FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), was issued.  FIN 45 requires a guarantor entity, at the inception of a guarantee covered by the measurement provisions of the interpretation, to record a liability for the fair value of the obligation undertaken in issuing the guarantee.  The Company previously did not record a liability when guaranteeing obligations unless it became probable that the Company would have to perform under the guarantee.  FIN 45 applies prospectively to guarantees the Company issues or modifies subsequent to December 31, 2002, but has certain disclosure requirements effective for interim and annual periods ending after December 15, 2002.  The Company does not anticipate FIN 45 will have a material effect on its 2003 financial statements.

Variable Interest Entities



In January 2003, the FASB issued FASB Interpretation 46 (FIN 46), Consolidation of Variable Interest Entities.  FIN 46 clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest ("variable interest entities").  Variable interest entities within the scope of FIN 46 will be required to be consolidated by their primary beneficiary.  The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity's expected losses, receives a majority of its expected returns, or both.  FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date.  It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003.  The Company is in the process of determining what impact, if any, the adoption of the provisions of FIN 46 will have upon its financial condition or results of operations.

Revenue Recognition

In November 2002, the Emerging Issues Task Force reached a consensus opinion on EITF 00-21, "Revenue Arrangements with Multiple Deliverables".  The consensus provides that revenue arrangements with multiple deliverables should be divided into separate units of accounting if certain criteria are met.  The consideration for the arrangement should be allocated to the separate units of accounting based on their relative fair values, with different provisions if the fair value of all deliverables are not known or if the fair value is contingent on delivery of specified items or performance conditions.  Applicable revenue recognition criteria should be considered separately for each separate unit of accounting.  EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003.  Entities may elect to report the change as a cumulative effect adjustment in accordance with APB Opinion 20, Accounting Changes.  The Company believes its revenue recognition policies are consistent with this new standard.

Consideration Received from a Vendor

In November 2002 the Emerging Issues Task Force reached a consensus opinion on EITF 02-16, "Accounting by a Customer (including a reseller) for Certain Consideration Received from a Vendor."  EITF 02-16 requires that cash payments, credits, or equity instruments received as consideration by a customer from a vendor should be presumed to be a reduction of cost of sales when recognized by the customer in the income statement.  In certain situations, the presumption could be overcome and the consideration recognized either as revenue or a reduction of a specific cost incurred.  The consensus should be applied prospectively to new or modified arrangements entered into after December 31, 2002.  The Company has not yet determined the effects of EITF 02-16 on its financial statements.

3. FINANCIAL INSTRUMENTS

Amounts reported for cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities, revolving loan and stockholders' loans approximate their fair values due to the relatively short term nature or demand nature of the instruments.  The carrying value of the demand instalment loan, loans payable, loan debentures and obligations under capital leases approximate fair value due to variable interest rates being charged on outstanding balances.

4. CREDIT RISK AND OTHER

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of accounts receivable.  The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses which, when realized, have been within range of management's expectations.

For the year ended June 30, 2003, approximately 24% (2002- 57%) of the Company's total revenues were generated through sales to Lee Enterprises Incorporated.  At June 30, 2003, approximately 2% of the Company's accounts receivable balance was due from this customer (2002 - Nil%).

5. PROPERTY AND EQUIPMENT

|                                        | 2003    | 2002                      
|--------------------------------------- | ------- | --------------------------
|                                        | Cost
$  | Accumulated
Depreciation
$
|Computer equipment and software         | 175,383 | 156,003                   
|Computer equipment under capital leases | 184,966 | 91,163                    
|Office furniture and equipment          | 22,802  | 12,170                    
|Leasehold improvements                  | 8,189   | 7,539                     
|                                        | 391,340 | 266,875                   
|Net book value                          | 124,465 | 102,232                   

6. PRODUCT DEVELOPMENT COSTS

|                         |  | 2003
$  | 2002
$ 
|------------------------ |  | ------- | -------
|Cost                     |  | 342,902 | 221,208
|Accumulated depreciation |  | 171,323 | 71,574 
|                         |  | 171,579 | 149,634

7. ACQUISITION

On July 10, 2002, the Company completed the acquisition of 10digit Communications ("10digit"), the online auction division of the Winnipeg Free Press owned by FP Canadian Newspapers Limited Partnership.  10digit was acquired to facilitate expansion of the Company's auction business.  The purchase price for the acquisition was calculated on revenue recognized from current 10digit customers for 2002 and was satisfied through the issuance of CityXpress shares.  The first tranche of 1,004,277 common shares was issued on September 9, 2002, based on revenue generated by 10 digit auctions for the first six month of 2002 and the shares were recorded at their fair value on the date of issuance.

The final tranche of 211,858 common shares was issued to FP Canadian Newspapers Limited Partnership in February 10, 2003 based on revenue generated from existing 10digit auction customers for the final six months of 2002.  These shares were recorded at their fair value on the date of issuance.

The net identifiable assets of 10digit acquired from FP Canadian Newspaper Limited Partnership during the year ended June 30, 2003 were:



|Equipment                           | $38,834 
|----------------------------------- | --------
|Intellectual property and contracts | 74,942  
|                                    | $113,776
|                                    |         
|1,216,135 shares issued             | $61,357 
|Capital leases assumed              | 38,834  
|Acquisition costs                   | 13,585  
|                                    | $113,776



The results of operations of 10digit are included for the period July 10, 2002 to June 30, 2003.



As part of the acquisition, CityXpress also entered into the following agreements with FP Newspapers Limited Partnership:

- a Noncompete and Nonsolicitation Agreement,

- a Registration Rights Agreement,
- an Assignment of Intellectual Property, and
- an Assignment and Assumption of Contracts Agreement.

If this acquisition had occurred on July 1, 2002 or July 1, 2001, the following proforma results of operations have been estimated:

|                                       |  | Year Ended
June 30, 2003
$ | Year Ended
June 30, 2002
$
|-------------------------------------- |  | -------------------------- | --------------------------
|Revenue                                |  | 1,173,481                  | 614,530                   
|Net Loss                               |  | (1,124,582)                | (1,922,432)               
|Net Loss per share (Basic and Diluted) |  | (0.05)                     | (0.08)                    

10digit intagible assets:

|                         |  | 2003
$ | 2002
$
|------------------------ |  | ------ | ------
|Intangible assets        |  | 74,942 | NIL   
|Accumulated amortization |  | 21,450 | NIL   
|                         |  | 53,492 | NIL   

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



|                          |  | 2003
$  | 2002
$ 
|------------------------- |  | ------- | -------
|Trade accounts payable    |  | 291,423 | 209,200
|                          |  |         |        
|Accrued interest          |  | 314,462 | 188,676
|Accrued vacation          |  | 52,317  | 33,341 
|Accrued liabilities       |  | 54,644  | 22,179 
|Total Accrued liabilities |  | 421,423 | 244,196



9. REVOLVING LOAN

On May 1, 2003, the Company entered into a Revolving Loan and General Security Agreement with a company controlled by a director.  Under this agreement, the Company has received $90,000 Cdn ($66,790 US) in funding.  The revolving loan carries an interest rate of 10% per annum of the outstanding balance and is payable monthly.  The outstanding balance of the loan cannot exceed 90% of the Company's 90 days accounts receivable outstanding balance.  Under the General Security Agreement, the Company has pledged its accounts receivable and tangible assets as collateral and security for all loan advances outstanding.  Interest for the year ended June 30, 2003 on this loan amounted to $993.

10. LOANS PAYABLE

On August 16, 2000, the Company entered into a Loan and Security Agreement with Lee Enterprises Incorporated ("Lee").  Under this agreement, the Company has received $350,000 in funding in the form of promissory notes that bear interest at the monthly Wall Street Journal rate, as detailed below:

|Loan date          | Amount
$ | Maturity date    | Weighted average effective interest rate for the year ended
June 30, 2003
(%)
|------------------ | -------- | ---------------- | -----------------------------------------------------------------------------
|August 17, 2000    | 125,000  | October 31, 2003 | 4.40                                                                         
|August 28, 2000    | 125,000  | October 31, 2003 | 4.40                                                                         
|September 19, 2000 | 40,000   | October 31, 2003 | 4.40                                                                         
|July 12, 2001      | 60,000   | October 31, 2003 | 4.40                                                                         
|                   | 350,000  |                  |                                                                              

Pursuant to an Investment Agreement [note 11], the maturity dates of these loans payable were extended from November 17, 2000, November 28, 2000 and December 19, 2000 respectively, to October 31, 2003.  Interest payable on these loans is payable on demand.

In conjunction with these agreements, the Company entered into a Collateral License Agreement and Escrow Agreement covering the licensing of the Company's software to Lee in the event of a default pursuant to the loan and security agreement. Interest for the year ended June 30, 2003 on these loans amounted to $15,393.

11. CONVERTIBLE LOAN DEBENTURES

On November 1, 2000, the Company entered into an Investment Agreement with Lee Enterprises Incorporated ("Lee") whereby Lee provided funding of $1,500,000 in the form of a floating rate subordinated convertible debenture.  The $1,500,000 subordinated convertible debenture consists of a series of six debentures of $250,000 that were received by the Company during the year ended June 30, 2001.

The Investment Agreement provides Lee the right to convert the floating rate subordinated convertible debenture into 6,902,429 common shares of the Company at a conversion price of $0.2173 per common share.  If Lee does not convert the debenture into common shares, the Company will be required to repay the $1,500,000 loan on October 31, 2003.  Each series of $250,000 subordinated convertible debenture bears interest at the Wall Street Journal rate less 1%.  The weighted average effective rate for the year ended June 30, 2003 on these debentures was 3.40%. Interest for the year ended June 30, 2003 on these debentures amounted to $50,969.

On July 30, 2001, the Company and Lee entered into a First Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $1,500,000 in the form of floating rate subordinated convertible debentures.  The additional $1,500,000 subordinated convertible debentures were in the form of a series of twelve debentures (debentures "G-R") ranging in value from $50,000 to $310,000, which were funded during the period from August 10, 2001 to July 1, 2002. This resulted in a total investment by Lee of $3,000,000.

The first amendment to the Investment Agreement provides Lee the right to convert the second $1,500,000 floating rate subordinated convertible debenture into 8,522,727 common shares of the Company at a conversion price of $0.176.  Should Lee convert both investments of $3,000,000 it would result in the Company issuing 15,425,156 common shares.  If Lee does not convert the second debenture to common shares the Company will have to repay the $1,500,000 loan on October 31, 2003.  Each Series "G-R" subordinated convertible debenture for the second investment of $1,500,000 bears interest at the Wall Street Journal rate less 1%.

In conjunction with the first amendment to the Investment Agreement dated July 30, 2001, the Company also amended the November 30, 2000 Loan and Security Agreement and the Collateral License Agreement and the Registration Rights Agreement to reflect the Series G-R debentures.

On August 1, 2002, the Company and Lee entered into a Second Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $300,000 in the form of floating rate subordinated convertible debentures.  The additional $300,000 subordinated convertible debentures were in the form of a series of three debentures (debentures "S, T and U") ranging in value from $75,000 to $125,000, which were funded on August 1, 2002, September 1, 2002 and October 11, 2002 respectively.  The weighted average effective rate for the year ended June 30, 2003 on these debenture series "G-U" was 3.39%.  Interest for the year ended June 30, 2003 on these debentures amounted to $59,364.

The second amendment to the Investment Agreement provides Lee the right to convert the $300,000 floating rate subordinated convertible debenture into 1,704,545 common shares of the Company at a conversion price of $0.176 per common share.

The second amendment to the Investment Agreement also contains certain affirmative and negative covenants that restrict the Company's activities.  As of June 30, 2003, the Company is in compliance with the covenants in the Investment Agreement as amended.  Interest due on the convertible debentures can be paid or converted into shares of the Company's common stock at fair market value on the date of conversion at the option of Lee.

On July 16, 2003 the Company and Lee entered into a Third Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $100,000 in the form of floating rate subordinated convertible debenture.  The additional $100,000 subordinated convertible debenture was in the form of a series "V" debenture, which was funded on July 16, 2003.

On August 14, 2003 the Company and Lee entered into a Fourth Amendment To Investment Agreement, which amended the Investment Agreement dated November 1, 2000 whereby Lee agreed to provide additional funding of $100,000 in the form of floating rate subordinated convertible debenture.  The additional $100,000 subordinated convertible debenture was in the form of a series "W" debenture, which was funded on August 14, 2003.

12. DEMAND INSTALMENT LOAN

On January 10, 2003, the Company repaid its Demand instalment loan with the Canadian Imperial Bank of Canada from the proceeds of stockholder loans of two senior officers. [Note 13(a)]

13. RELATED PARTY TRANSACTIONS

[a]	Stockholders' loans

In January 2003, the Company's chief executive officer and chief financial officer provided the Company $350,000 Cdn ($259,740 US) in the form of Stockholder loans.

In February 2003, the Company chief executive officer and chief financial officer provided the Company $59,000 Cdn ($43,785 US) in the form of Stockholder loans.

In May 2003, the Company chief executive officer and chief financial officer provided the Company $20,100 Cdn ($14,917 US) in the form of Stockholder loans.

At June 30, 2003 the Company has several unsecured stockholder loans denominated in Canadian dollars outstanding with the Company's chief executive officer and chief financial officer.  The stockholders' loans, all of which are without stated terms of repayment unless otherwise stated, are payable on demand.

Balance Outstanding

|                                                                                                                          | Annual interest
rate at June 30, 2003
% | June 30
2003
$ | June 30
2002
$
|------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | -------------- | --------------
|Loans payable bearing interest at 4.55% and repayable in equal monthly blended instalments of $1,450 through January 2028 | 4.55                                    | 257,452        | NIL           
|Loans payable bearing interest at 4.55% and repayable in equal monthly blended instalments of $1,468 through January 2028 | 4.55                                    | 250,462        | 229,063       
|Loan payable bearing interest at Toronto Dominion Bank monthly TD Select Line rate                                        | 7.75                                    | 36,334         | 16,680        
|Loan payable bearing interest at the CIBC Visa monthly interest rate                                                      | 19.50                                   | 12,742         | 13,344        
|Loan payable bearing interest at 4.5% per annum                                                                           | 4.50                                    | 14,100         | 7,876         
|Loan payable bearing interest at Canadian Imperial Bank of Canada monthly Line rate                                       | 8.00                                    | 13,602         | NIL           
|Loan payable bearing interest at Canadian Imperial Bank of Canada monthly Line rate                                       | 8.50                                    | 10,405         | NIL           
|Loan payable bearing interest at Canadian Imperial Bank of Canada monthly Line rate                                       | 9.50                                    | 10,083         | NIL           
|Loan payable bearing interest at North Shore Credit Union monthly Line rate                                               | 8.75                                    | 6,762          | NIL           
|Loan payable bearing interest at the Scotia McLeod monthly interest rate                                                  | NIL                                     | NIL            | 5,873         
|                                                                                                                          |                                         | 611,942        | 272,836       

Interest incurred on the loans amounted to $24,884 for the year ended June 30, 2003 [2002 - $26,711].

[b]	Other

[i]On March 3, 2003, the Company granted 1,310,626 warrants to two of the Company's officers, as consideration for stockholders' loans totaling $350,000 Cdn ($259,740 US) that were made to the Company during the year ended June 30, 2003 [note 13[a]].  Each warrant is exercisable to purchase one common share of the Company at $0.18 per share through March 3, 2006 [note 16[c]].  The estimated fair value of these warrants at the date of issuance of $65,000 was recorded as an expense in the consolidated statement of loss for the year ended June 30, 2003.  The Black Scholes options pricing model was used to value the warrants with the following assumptions: no dividend yield; risk-free interest rate of 5.0%; expected volatility of 140%; and an expected life of 3.0 years.

[ii]On June 16, 2003, the Company granted 782,187 warrants to two of the Company's officers, as consideration for stockholders' loans totaling $189,721 Cdn ($140,793 US) that were made to the Company during the year ended June 30, 2003 [note 13[a]].  Each warrant is exercisable to purchase one common share of the Company at $0.18 per share through June 16, 2006 [note 16[c]].  The estimated fair value of these warrants at the date of issuance of $15,644 was recorded as an expense in the consolidated statement of loss for the year ended June 30, 2003.  The Black Scholes options pricing model was used to value the warrants with the following assumptions: no dividend yield; risk-free interest rate of 5.0%; expected volatility of 140%; and an expected life of 3.0 years.

14. OBLIGATIONS UNDER CAPITAL LEASES

The Company leases certain of its computer equipment under capital leases through fiscal year 2006. The future minimum lease payments required under capital leases as at June 30, 2003 are as follows:

|                                                          | $       
|--------------------------------------------------------- | --------
|2004                                                      | 83,202  
|2005                                                      | 45,403  
|2006                                                      | 6,902   
|Total minimum lease payments                              | 135,507 
|Less: amounts representing interest                       | (16,922)
|Present value of minimum lease payments                   | 118,585 
|Less: current portion of obligations under capital leases | (70,812)
|Long-term portion of obligations under capital leases     | 47,773  

15. COMMITMENTS

The Company leases its premises and certain office equipment under operating leases expiring through fiscal year 2007.  Future minimum lease commitments under these leases are as follows:

|                                    | Operating
Leases
$
|----------------------------------- | ------------------
|2004                                | 126,809           
|2005                                | 114,558           
|2006                                | 114,718           
|2007                                | 95,598            
|Total future minimum lease payments | 451,683           

Rent expense for the year ended June 30, 2003 amounted to approximately $111,476 [2002 - $134,892].

16. SHARE CAPITAL

[a]	Common stock

On July 25, 2001, the Company issued 100,000 common shares at $0.25 per share upon exercise of warrants.  In lieu of cash payment, the exercise price was settled in payment of accounts payable of $25,000.

On December 12, 2001, the Company issued 160,000 common shares to a vendor for marketing services with a fair market value of $4,800.

On September 9, 2002, the Company issued 1,004,277 common shares to FP Canadian Newspapers Limited Partnership in connection with the acquisition of 10digit Communications [Note 7].

On February 10, 2003, the Company issued the final tranche of 211,858 common shares to FP Canadian Newspapers Limited Partnership as part of the acquistion of 10digit Communications [Note 7].

On April 17, 2003, the Company agreed to issue 198,587 common shares at $0.0637 per share to its board of directors for services with a fair market value of $12,650.

[b]	Stock options

On August 25, 1999, and as amended on November 29, 2000 the Board of Directors approved the creation of the Corporate Stock Option Plan ("Plan") pursuant to which the Company has reserved 3,000,000 [2000 - 2,000,000] shares of common stock.  The term and vesting period of options are determined by the directors at the date of grant.  The majority of the options granted to date are exercisable over a four year period and vest on a cumulative basis at 1/3 per year.

On November 29, 2001, the Company granted 75,000 stock options to a consultant for services rendered to the Company during the quarter ended December 31, 2001.  Each stock option is exercisable into one common share of the Company at a price of $0.25 per share through November 30, 2004.  The estimated fair value of these stock options at the date of issuance of $450 was recorded as an expense in the consolidated statement of operations for the quarter ended December 31, 2001.  The Black Scholes option pricing model was used to value the warrants with the following assumptions: no dividend yield; risk-free interest rate of 5.0%; expected volatility of 153%; and an expected life of 3.0 years.

On December 19, 2002, at the Annual Shareholder Meeting the shareholders approved changes to the Corporate Stock Option Plan ("Plan") pursuant to which the Company has reserved a total of 4,000,000, [June 30, 2002 - 3,000,000] shares of common stock.  The terms and vesting period of options are determined by the directors at the date of grant.  The majority of the options granted to date are exercisable over a four-year period from the date the option was granted and vest on a cumulative basis at 1/3 per year.

Stock option transactions for the years ended June 30, 2003 and 2002 are summarized below:



|                             | Shares       | Outstanding options
|---------------------------- | ------------ | -------------------
|                             | available    |                    
|                             | under option | Shares             
|                             | #            | #                  
|Balance, June 30, 2001       | 1,100,000    | 1,900,000          
|Granted, November 29, 2001   | (145,000)    | 145,000            
|Granted, June 28, 2002       | (1,225,000)  | 1,225,000          
|Forfeited                    | 380,000      | (380,000)          
|Balance, June 30, 2002       | 110,000      | 2,890,000          
|Increased in reserved shares | 1,000,000    | NIL                
|Granted, January 30, 2003    | (310,000)    | 310,000            
|Forfeited                    | 50,000       | (50,000)           
|Cancelled                    | 200,000      | (200,000)          
|Balance, June 30, 2003       | 1,050,000    | 2,950,000          

The following table summarizes information about stock options that are outstanding at June 30, 2003:

|               |                                     | Options outstanding         | Options exercisable                
|-------------- | ----------------------------------- | --------------------------- | -----------------------------------
|Exercise
price | Number
outstanding at
June 30, 2003 | Weighted-
average
remaining | Number
outstanding at
June 30, 2003
|$              | #                                   | contractual life            | #                                  
|0.25           | 2,950,000                           | 2.09                        | 1,741,667                          

[c]	Warrants

The following represents a summary of warrants outstanding at June 30, 2003:

|                       | Outstanding warrants
|---------------------- | --------------------
|                       | Shares              
|Grant Date             | #                   
|September 30, 1999     | 465,800             
|October 13, 1999       | 132,138             
|December 10, 1999      | 408,000             
|January 18, 2000       | 138,000             
|January 31, 2000       | 500,000             
|May 1, 2000            | 405,240             
|May 18, 2000           | 280,000             
|June 13, 2000          | 541,600             
|November 10, 2000      | 200,000             
|June 26, 2001          | 160,000             
|March 3, 2003          | 1,310,626           
|June 16, 2003          | 782,187             
|Balance, June 30, 2003 | 5,323,591           

Weighted average exercise price of all outstanding warrants at June 30, 2003 is $0.22.

Warrant transactions for the years ended June 30, 2003 and 2002 are summarized below:

|                                |  | Outstanding warrants
|------------------------------- |  | --------------------
|                                |  |                     
|                                |  | Warrants            
|                                |  | #                   
|Balance, June 30, 2001 and 2002 |  | 3,230,778           
|Granted, March 3, 2003          |  | 1,310,626           
|Granted, June 16, 2003          |  | 782,187             
|Balance, June 30, 2003          |  | 5,323,591           

On July 14, 2001, 45,260 warrants with an exercise price of $0.25 expired unexercised.

On September 29, 2001, the Company extended the expiry dates of all outstanding warrants issued in connection with private placements and loan guarantees by one year.

On June 28, 2002, the Company extended the expiry dates of all outstanding warrants issued by an additional two years.

[d]	Loss per common share

The following table sets forth the computation of basic and diluted loss per share:

|                                                     | 2003        | 2002       
|---------------------------------------------------- | ----------- | -----------
|                                                     | $           | $          
|Net loss for the year                                | (1,124,582) | (1,829,444)
|Net loss attributable to common shareholders         | (1,124,582) | (1,829,444)
|Weighted average number of common shares outstanding | 24,194,083  | 23,222,231 
|Basic and diluted loss per common share              | (0.05)      | (0.08)     

For the years ended June 30, 2003 and 2002, all of the Company's common shares issuable upon the exercise of 2,950,000 (2002 - 2,890,000) stock options and 5,323,591 (2002 - 4,541,404) warrants were excluded from the determination of diluted loss per common share as their effect would be anti-dilutive.

[e]	Authorized share capital

On November 29, 2001, the shareholders approved in the Annual General Meeting an increase in the Company's authorized share capital from 50,000,000 no par value common shares to 100,000,000 no par value common shares.

17. INCOME TAXES

The Company is subject to United States Federal Taxes at an approximate rate of 34%.  It is also subject to Canadian Federal and British Columbia provincial taxes of approximately 45%.  No current provision or benefit for income taxes has been recorded for the years ended June 30, 2003 or 2002 as the Company has incurred operating losses and has no carryback potential.

The Company's deferred income tax recovery for the year ended June 30 comprises:

|              | 2003 | 2002    
|------------- | ---- | --------
|              | $    | $       
|United States | NIL  | (93,100)
|Canada        | NIL  | NIL     
|              | NIL  | (93,100)

The reconciliation of income tax attributable to continuing operations computed at the U.S. federal statutory tax rates to income tax expense for the years ended June 30 is:

|                                                           | 2003      | 2002     
|---------------------------------------------------------- | --------- | ---------
|                                                           | $         | $        
|Tax at U.S. statutory rates                                | (360,000) | (653,000)
|Higher effective income taxes of other country             | (46,000)  | (168,000)
|Deferred tax assets not recognized for accounting purposes | 80,000    | 52,000   
|Tax losses not recognized for accounting purposes          | 209,000   | 640,000  
|Other                                                      | 117,000   | 35,900   
|Income tax recovery                                        | NIL       | (93,100) 

Net deferred tax assets (liabilities) consist of the following at June 30:

|                                          | 2003        | 2002       
|----------------------------------------- | ----------- | -----------
|Deferred tax assets                       | $           | $          
|Loss carryforwards                        | 3,060,000   | 2,800,000  
|Tax values in excess of book value        | 201,000     | 44,000     
|Valuation allowance for future tax assets | (3,261,000) | (2,844,000)
|Net deferred tax assets                   | NIL         | NIL        



The tax losses expire as follows:



|     | U.S.
$  | Canadian
$
|---- | ------- | ----------
|2004 | NIL     | 4,000     
|2005 | NIL     | 180,000   
|2006 | NIL     | 1,180,000 
|2007 | NIL     | 1,610,000 
|2008 | NIL     | 1,790,000 
|2009 | NIL     | 1,410,000 
|2010 | NIL     | 414,000   
|2019 | 78,000  | NIL       
|2020 | 5,000   | NIL       
|2021 | 13,000  | NIL       
|2022 | 67,000  | NIL       
|     | 163,000 | 6,588,000 



18. SEGMENT INFORMATION

Predominantly all of the Company's assets and employees are located in Canada for the years presented. The following table represents total revenues based on the location of the customer:

|               | 2003      | 2002   
|-------------- | --------- | -------
|               | $         | $      
|U.S.           | 984,878   | 363,509
|Canada         | 188,603   | 51,021 
|Total revenues | 1,173,481 | 414,530

19. COMPARATIVE FIGURES

Certain comparative figures have been reclassified from statements previously presented to conform to the presentation adopted in the current year.

20. SUBSEQUENT EVENTS

On July 16, 2003, the Company entered into the Third Amendment to the Investment Agreement whereby Lee advanced an additional $100,000 Series "V " debenture and on August 14, 2003, the Company entered into the Fourth Amendment to the Investment Agreement whereby Lee advanced an additional $100,000 Series "W" debenture.

Part III Exhibits

The following Exhibits are filed herewith. The Company shall furnish copies of Exhibits for a reasonable fee covering the expenses of furnishing copies upon request.



Exhibit

Number 	Description



99.1 Certificate of Chief executive Officer dated October 10, 2003

99.2 Certificate of Chief Financial Officer dated October 10, 2003

The following Exhibits are incorporated by reference to Exhibits previously filed with the Commission. The Company shall furnish copies of Exhibits for a reasonable fee covering the expenses of furnishing copies upon request.

Exhibit

Number 				Description

3 (i)   	Articles of Incorporation of Wicked Wings of Buffalo Inc. effective January 15,1981.

Incorporated by reference to Exhibit 1 to the Company's Form 10SB.

3 (i)Articles of amendment of Wicked Wings of Buffalo Inc. effective August 3, 1998.

Incorporated by reference to Exhibit 2 to the Company's Form 10SB.

3.(i)	Articles of name change from Wicked Wings of Buffalo to WelcomeTo Search Engine, Inc. effective January 7, 1999.

Incorporated by reference to Exhibit 3 to the Company's Form 10SB.

3.(i)	Articles of name change from WelcomeTo Search Engine, Inc. to CityXpress Corp effective August 25, 1999.

Incorporated by reference to Exhibit 4 to the Company's Form 10SB.

3.(ii)	Bylaws of CityXpress Corp

Incorporated by reference to Exhibit 5 to the Company's Form 10SB.

1. Promissory Note with Ken Bradley for $50,000 Canadian funds dated June 26, 2001.

1. Promissory Note with Phil Dubois for $50,000 Canadian funds dated June 26, 2001

10.3	Acquisition Agreement by and between WelcomeTo Search Engine, Inc. and Xceedx Technologies Inc. dated January 27, 1999.

Incorporated by reference to Exhibit 6 to the Company's Form 10SB.

10.4	Acquisition Agreement by and between WelcomeTo Search Engine, Inc. and WelcomeTo Search Engine Inc. dated January 7, 1999.

Incorporated by reference to Exhibit 7 to the Company's Form 10SB.

1. Pooling Agreement by and between The Shareholders of WelcomeTo Search Engine, Inc. listed on Schedule A to the Agreement and Russell & DuMoulin dated as of December 11, 1999.
2. Voluntary Pooling Agreement by and between the undersigned Shareholders of WelcomeTo Search Engine, Inc., WelcomeTo Search Engine, Inc. and Russell & DuMoulin dated as of December 11, 19999.
3. Stock Option Agreement.
4. Service Agreement by and between WelcomeTo Search Engine, Inc. and Phil Dubois, dated January 27, 1999.
5. Service Agreement by and between WelcomeTo Search Engine, Inc. and Ken R. Bradley, dated January 27, 1999.
6. Data and service Agreement by and between WelcomeTo Search Engine, Inc. and Dun and Bradstreet dated March 5, 1999.
7. Strategic Partner Agreement by and between CityXpress Corp and Lee Enterprises Incorporated.
8. Canadian Imperial Bank of Commerce Credit Agreement with the Company.
9. Canadian Imperial Bank of Commerce Securities Pledge Agreement with the Company.
10. Canadian Imperial Bank of Commerce Security Agreement with the Company.
11. Guarantee of Mr. Phil Dubois.
12. Guarantee of Mr. Ken Bradley.
13. CyberCash Agreement.
14. CityXpress Corp specimen share certificate.
15. Loan and Security Agreement with Lee Enterprises Incorporated. dated August 16, 2000.
16. Promissory Note Agreement with Lee Enterprises Incorporated. dated August 17, 2000.
17. Promissory Note Agreement with Lee Enterprises Incorporated. dated August 28, 2000.
18. Promissory Note Agreement with Lee Enterprises Incorporated dated September 19, 2000.
19. Collateral License Agreement with Lee Enterprises Incorporated dated August 16, 2000.
20. Escrow Agreement with Lee Enterprises Incorporated. dated August 16, 2000.
21. Promissory Note with Ken Bradley for $50,000 Canadian funds dated January 14, 2000.
22. Promissory Note with Phil Dubois for $25,000 Canadian funds dated January 31, 2000.
23. Promissory Note with Phil Dubois for $25,000 Canadian funds dated April 20, 2000.
24. Promissory Note with Ken Bradley for $25,000 Canadian funds dated April 25, 2000.
25. Promissory Note with Ken Bradley for $125,000 Canadian funds dated June 13, 2000.
26. Promissory Note with Phil Dubois for $125,000 Canadian funds dated June 13, 2000.
27. First Amendment to Investment Agreement dated July 30, 2001.
28. Amended and Restated Loan and Security Agreement dated July 30, 2001.
29. Amended Collateral License Agreement dated July 30, 2001.
30. Amended and Restated Registration Rights Agreement dated July 30, 2001.
31. Asset Purchase Agreement dated July 10, 2002. Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K dated July 10, 2002.
32. Equipment and Lease Agreement dated July 10, 2002. Incorporated by reference to Exhibit 2.2 to the Company's Form 8-K dated July 10, 2002.
33. Non-Compete and non-Solicitation Agreement dated July 10, 2002. Incorporated by reference to Exhibit 2.3 to the Company's Form 8-K dated July 10, 2002.
34. Registration Rights Agreement dated July 10, 2002. Incorporated by reference to Exhibit 2.4 to the Company's Form 8-K dated July 10, 2002.



Exhibit 99.1



Statement of Chief Executive Officer

Pursuant to Section 1350 of Title 18 of the United States Code





Pursuant to Section 1350 of Title 18 of the United States Code, I, Phil Dubois, the Chief Executive Officer of CityXpress Corp. (the "Corporation"), hereby certify that:

(1) I have reviewed the Annual Report on Form 10-KSB of the Corporation (the "Report") [to which this statement is an Exhibit];

(2) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(3) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Phil Dubois

Name: Phil Dubois

Title: President &Chief Executive Officer of CityXpress Corp.

Dated: October 10, 2003



Exhibit 99.2



Statement of Chief Financial Officer

Pursuant to Section 1350 of Title 18 of the United States Code





Pursuant to Section 1350 of Title 18 of the United States Code, I, Ken Bradley, the Chief Financial Officer of CityXpress Corp. (the "Corporation"), hereby certify that:

(1) I have reviewed the Annual Report on Form 10-KSB of the Corporation (the "Report") [to which this statement is an Exhibit];

(2) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(3) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Ken Bradley

Name: Ken Bradley

Title: Chief Financial Officer of CityXpress Corp.

Dated: October 10, 2003