<PAGE>

                                  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 Year Ended December 31, 2002
                       Commission File Number: 333-85011

                                   STRATABASE
                 (Name of small business issuer in its charter)

              Nevada                                    88-0414964
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

        34595 3rd Ave., Suite 101
         Abbotsford, BC, Canada                           V2S.8B7
(Address of principal executive offices)                (Zip Code)

         Issuer's telephone number, including area code: (604) 504-5811

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

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

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days.

                                Yes [ X ] No [ ]

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-KSB. [ ]

     The issuer's revenues for its most recent fiscal year were $430,240.

     Based on the closing sales price of the Common Stock on March 28, 2003, the
aggregate market value of the voting stock of registrant held by  non-affiliates
was $4,034,300.

     The  registrant  has one  class  of  Common  Stock  with  8,033,372  shares
outstanding as of March 28, 2003.

                    Documents Incorporated By Reference: None

     Transitional  Small Business Issuer  Disclosure Format (check one):
Yes [ ] No [X].


<PAGE>


                                   STRATABASE
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
PART I
<S>                                                                                                    <C>
     Item 1.   Description of Business...................................................................1
     Item 2.   Description of Property...................................................................4
     Item 3.   Legal Proceedings.........................................................................4
     Item 4.   Submission of Matters to a Vote of Security Holders.......................................5

PART II
     Item 5.   Market for Common Equity and Related Stockholder Matters .................................5
     Item 6.   Management's Discussion and Analysis or Plan of Operation.................................7
     Item 7.   Financial Statements.....................................................................20
     Item 8.   Changes in and Disagreements with Accountants on Accounting and
               Financial Disclosure.....................................................................43

PART III
     Item 9.   Directors,   Executive  Officers,  Promoters  and  Control
               Persons; Compliance
               with Section 16(a) of the Exchange Act...................................................43
     Item 10.  Executive Compensation...................................................................45
     Item 11.  Security   Ownership  of  Certain  Beneficial  Owners  and
Management     47
     Item 12.  Certain Relationships and Related Transactions...........................................49
     Item 13.  Exhibits and Reports on Form 8-K.........................................................49
     Item 14.  Controls and Procedures..................................................................50

SIGNATURES

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBITS
       24.2    Consent of Moss Adams LLP
       99.1    Section 906 Certification
</TABLE>

<PAGE>


                                     PART I

Item 1.  Description of Business.

Stratabase  develops Enterprise and Customer  Relationship  Management (CRM)
software for its clients and for general  distribution,  and also  technical
and database  solutions for enterprises.  Our products are designed to allow
enterprises to improve the efficiency of knowledge  workers  through the use
of our web-based  software  tools.  These tools allow  enterprises to manage
relationships  and  contacts,  administer  and  organize  time  allocations,
collaborate  with  others,   manage  data,   automate   communications   and
productivity reporting, and conduct data synchronization.

We have developed both  proprietary  and open source  software.  Although in
the past we have  focused  predominantly  on  developing  open  source  code
software,  we have altered our  direction to focus on  proprietary  software
development.  We believe  that we can extract  more value from our  software
by keeping it proprietary.

Stratabase  was  incorporated  under  the  laws of the  State of  Nevada  on
November 18, 1998 and commenced  operations in January 1999.  For the period
from  inception  to  December  31,  1999,  we  operated  in the  development
stage.  Substantially  all  activity  during  this period  through  1999 was
devoted to the raising of equity  capital and  development  of our long-term
business  model,  up until the completion of our initial public  offering in
February  2000.  Our  office is  located  at 34595 3rd  Avenue,  Suite  101,
Abbotsford, BC, V2S.8B7, Canada. The telephone number is (604) 504-5811.

Overview of the Enterprise Software Industry

Enterprise  and  CRM  software   applications  are  designed  to  facilitate
greater  productivity  in the workplace and enhance  communications  between
businesses  and  customers.  There are several  subcategories  of Enterprise
and CRM  software,  all of which in  various  ways  support  the  efforts of
businesses to enhance productivity and communications.

Large  vendors of Enterprise  and CRM software  such as Siebel  Systems have
attempted to add Internet  functionality  to their  existing  product lines.
Simultaneously,  dozens of new  companies  have  emerged  which have created
new software  solutions  with more support for Internet  based  access.  The
number  of  industry-specific  software  vendors  is  loosely  estimated  at
several thousand competitors.


<PAGE>


Stratabase Software

We engineer  what we believe to be  advanced  web-based  Enterprise  and CRM
software.  We have also developed  software which  synchronizes data between
portable computing devices.

The software we have developed is:

- flexible  and  scalable--capable  of handling  thousands  of  simultaneous
  users;
- functional--able to handle enterprise-level requirements;
- adaptable--allowing   the  user  to   modify   the   software   to  meet
  particular requirements;
- reliable--constantly monitored and improved by our engineers.

In addition to offering technically  advanced software,  we provide users of
the software we have  developed  with extensive  written  documentation  and
limited  installation  support.  Our technical team has prepared manuals and
other   documentation   that  accurately  and  clearly  describes  the  many
features of this  software  and  advises  the user on how best to  implement
these features.

Professional Services

We offer a limited  range of services  relating to the  development  and use
of the software we have  created.  While these  services  include  technical
support,  custom  development,  and  consulting,  the primary  source of our
revenue  has  been in the  provision  of  technical  services  and  database
solutions  for our  clients,  using our  software.  We bill our clients on a
project basis as opposed to an hourly basis.

Competition

In the broader market for  proprietary  Enterprise  and CRM software,  there
are a large number of  well-established  companies  that have  significantly
greater financial  resources,  larger  development staffs and more extensive
marketing  and  distribution  capabilities  than  we do.  These  competitors
include Siebel Systems, SAP, Pivotal and many others.

Many of our  competitors are well  positioned  vendors who have  established
and stable  customer  bases and continue to attract new  customers.  Some of
them also provide  Enterprise  and  CRM-related  services to users.  Most of
these companies are larger and more experienced  organizations  than we are.
In addition,  we face potential  competition from many companies with larger
customer bases,  greater  financial  resources and stronger name recognition
than we have.

Software  markets are not always  characterized  by traditional  barriers to
entry  that  are  found  in  many  traditional  markets.   Accordingly,  new
competitors or alliances  among  competitors  can emerge and rapidly acquire
significant market share.

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

<PAGE>


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

Although we believe that we compete  favorably with many of our  competitors
in a number of respects,  including product  performance and  functionality,
we believe that many of our  competitors  enjoy  greater  name  recognition,
have  software  which  covers far more  aspects of  Enterprise  and Customer
Relationship  Management than our software does, have superior  distribution
capabilities  and offer more  extensive  support  services than we currently
do. In addition,  there are significantly  more  applications  available for
competing software  solutions,  than there are for ours. An integral part of
our strategy in the future,  however,  is to address these  shortcomings by,
among other things,  strengthening our existing  business  relationships and
entering  into new  ones in an  effort  to  enhance  our  name  recognition;
adding more  programmers  internally  to improve the software  more rapidly;
providing  more services to our clients that have high  associated  margins;
and, enhancing the software's functionality.

Intellectual Property

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

The open  source  software we have  developed  has been made  available  for
licensing  under the GNU General  Public  License  (GPL),  pursuant to which
anyone,  generally,  may copy,  modify and distribute the software,  subject
only to the  restriction  that  any  resulting  or  derivative  work is made
available  to the  public  under  the same  terms.  Therefore,  although  we
retain  the  copyrights  to the  code,  due to the GPL and the  open  source
nature of our  software,  the  intellectual  property  contained  within the
software  does not belong to us, nor to anyone  else.  That is the nature of
open  source  software.  However,  we  do  enter  into  confidentiality  and
nondisclosure agreements with our employees and consultants.

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

We are pursuing  registration of some of our trademarks in the U.S.  However
we may be unable  to detect  the  unauthorized  use of, or take  appropriate
steps  to  enforce,  our  trademark  rights.  Although  we  have  begun  the
registration  process  of  our  trademarks  in  the  U.S.,  it  is  not  yet
complete.  Additionally,  we do not have any  assurances  that the trademark
applications  will  be  successful.   Failure  to  adequately   protect  our
trademark  rights  could  harm or even  destroy  the  Stratabase  brand  and
impair  our  ability  to  compete  effectively.  Furthermore,  defending  or
enforcing  our  trademark   rights  could  result  in  the   expenditure  of
significant  financial  and  managerial  resources,  which could  materially
adversely affect our business, operating results and financial condition.

<PAGE>


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

Employees

As of March 15, 2003, we had 5 employees,  including  our two officers,  Mr.
Trevor Newton,  Chairman of the Board, President,  Secretary,  Treasurer and
CEO, and Mr. Fred Coombes,  Vice  President of Corporate  Development  and a
Director.   Mr.  Newton   supervises   the  company's   operations.   It  is
anticipated  that  we  will  need  to  add  additional  managerial,   sales,
technical  and  administrative  staff in the future in order to realize  our
business objectives.

Our equipment and primary agreements

We lease a  Bandwidth/Connectivity  (fiber optic line) from BCTel/Telus.  It
is the subject of a  three-year  agreement  which  commenced  on February 1,
2001, and calls for a monthly fee of $1,000.

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

Item 2.  Description of Property.

We do not own  any  real  property.  Our  offices  are  approximately  2,000
square feet located at 34595 3rd Avenue,  #101,  Abbotsford,  B.C., V2S.8B7,
Canada.  The  office  is leased  for a  two-year  lease  that  commenced  on
February  1,  2001.  The lease is being  renewed  for an  additional  twelve
month  period.  The monthly rent is  approximately  $1,500.  We believe that
the  facilities  will be  adequate  for the  foreseeable  future.  All costs
described  in this  section  are stated in U.S.  dollars as  converted  from
Canadian  dollars.  Accordingly,  the costs may vary to some degree with the
currency exchange rate.

Item 3.  Legal Proceedings.

We are not involved in any  material  pending  litigation,  nor are we aware
of any material pending or contemplated  proceedings  against us. We know of
no material legal  proceedings  pending or threatened,  or judgments entered
against any of our directors or officers in their capacity as such.

<PAGE>


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

No matters were  submitted to a vote of security  holders during the quarter
ended December 31, 2002.

                                     PART II
                                     -------

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

In July 2000 our common  stock  began  trading on the Nasdaq  Stock  Market,
Inc. Over the Counter  Bulletin Board under the symbol  "SBSF.OB".  Prior to
that,  there was no market for the Common Stock.  The  following  table sets
forth the range of high and low bid  prices of the  Company's  Common  Stock
for the  quarters  indicated  through  the fourth  quarter of 2002 and 2001,
respectively:

Calendar Year              High Bid           Low Bid
-------------              --------           -------


2002:
-----

First quarter                 $1.59             $1.11
Second quarter                $3.37             $1.31
Third quarter                 $2.88             $1.25
Fourth quarter                $2.37             $1.10

2001:
-----

First quarter                 $1.84             $0.75
Second quarter                $2.50             $0.63
Third quarter                 $2.50             $1.01
Fourth quarter                $2.00             $1.20


The  quotations  reflect  inter-dealer   prices,   without  retail  markups,
markdowns,   or  commissions  and  do  not  necessarily   represent   actual
transactions.  The  quotations  were  derived  from the  National  Quotation
Bureau OTC Market  Report.  The Company  estimates  that as of March 1, 2003
there were approximately 100 holders of record of the Common Stock.

Our Transfer and Warrant Agent

We have appointed  Securities  Transfer  Corp.,  with offices at 2591 Dallas
Parkway,  Suite 102,  Frisco,  TX 75034,  (469) 633-0101,  as transfer agent
for our  shares  of  common  stock  and  warrants.  The  transfer  agent  is
responsible  for  all  record-keeping   and   administrative   functions  in
connection with the common and preferred shares of stock.

<PAGE>


Dividend Policy

As of  March  24,  2003,  there  had  been  no  dividends  declared  on  the
Company's Common Stock.
We have never  declared or paid any cash  dividends  on our common stock nor
do we  anticipate  paying any in the  foreseeable  future.  Furthermore,  we
expect  to  retain  any  future  earnings  to  finance  our  operations  and
expansion.  The  payment  of cash  dividends  in the  future  will be at the
discretion  of our Board of  Directors  and will  depend  upon our  earnings
levels,  capital  requirements,  any  restrictive  loan  covenants and other
factors the Board considers relevant.

Recent Sales of Unregistered Securities

We did not offer for sale or sell any  securities  during  the last  quarter
of 2002.

Securities Authorized for Issuance under Equity Compensation Plans

We do not  have any  equity  compensation  plan  that  was  approved  by our
stockholders.  Set forth below is certain  information  as of  December  31,
2002  regarding  equity  compensation  plans that have not been  approved by
our stockholders.

Equity compensation plans not approved by stockholders


<TABLE>
<CAPTION>
                                     Number of securities to the  Weighted average exercise
                                      issued upon exercise of        price of outstanding      Number of securities
                                   outstanding options, warrants           options,          remaining available for
              Plan Category                  and rights              warrants and rights         future issuance
       ----------------------------------------------------------------------------------------------------------------
<S>                                           <C>                           <C>                     <C>
       2002 Stock Option Plan                 245,000                       $0.57                   1,420,000

       2000 Stock Option Plan                 470,000                       $0.88                       -
                                  -------------------------------------------------------------------------------------
       Total                                  715,000                       $0.77                   1,420,000
                                  =====================================================================================
</TABLE>


         The following  discussion  describes  material terms of grants made
pursuant to the stock option plans:

         Pursuant to both Stock Option  Plans,  grants of shares can be made
to employees,  officers, directors,  consultants and independent contractors
of  non-qualified  stock  options as well as for the grant of stock  options
to employees  that qualify as incentive  stock  options under Section 422 of
the  Internal  Revenue  Code  of 1986  ("Code")  or as  non-qualified  stock
options.  The Plans are  administered  by the Option  Committee of the Board
of   Directors   (the   "Committee"),   which  has,   subject  to  specified
limitations,  the full  authority to grant  options and  establish the terms
and conditions for vesting and exercise thereof.

         In order to  exercise  an  option  granted  under  the  Plans,  the
optionee  must pay the full  exercise  price of the shares being  purchased.
Payment may be made either:  (i) in cash;  or (ii) at the  discretion of the
Committee,  by  delivering  shares  of  common  stock  already  owned by the

<PAGE>

optionee  that have a fair  market  value equal to the  applicable  exercise
price;  or (iii) with the approval of the  Committee,  with monies  borrowed
from us.

         Subject to the  foregoing,  the Committee  has broad  discretion to
describe the terms and  conditions  applicable to options  granted under the
Plan. The Committee may at any time  discontinue  granting options under the
Plan or otherwise  suspend,  amend or terminate  the Plan and may,  with the
consent of an optionee,  make such  modification of the terms and conditions
of such optionee's option as the Committee shall deem advisable.


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

You should read this discussion together with our financial statements and
related notes included elsewhere in this report.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

The  matters  discussed  in this  section and in certain  other  sections of
this Form 10-KSB contain  forward-looking  statements  within the meaning of
Section  21D  of the  Securities  Exchange  Act of  1934,  as  amended,  and
Section 27A of the  Securities  Act of 1933, as amended,  that involve risks
and  uncertainties.  All  statements  other than  statements  of  historical
information  provided herein maybe deemed to be forward-looking  statements.
Without  limiting  the  foregoing,   the  words  "may",   "will",   "could",
"should",  "intends",  "thinks",  "believes",  "anticipates",   "estimates",
"plans",  "expects",  or the negative of such terms and similar  expressions
are intended to identify  assumptions  and  uncertainties  which could cause
actual  results to differ  materially  from  those  expressed  in them.  Any
forward-looking  statements  are qualified in their entirety by reference to
the factors  discussed  throughout  this report.  The  following  cautionary
statements  identify  important  factors that could cause our actual results
to  differ   materially   from  those   projected  in  the   forward-looking
statements  made in this  report.  Among the key factors  that have a direct
bearing on our results of operations are:

-    General  economic  and  business  conditions;  the  existence or absence of
     adverse  publicity;  changes  in, or  failure  to comply  with,  government
     regulations;  changes in marketing  and  technology;  changes in political,
     social and economic conditions;

-    Increased competition in the Internet;  Internet capacity;  general risk of
     the Internet.

-    Success  of  operating   initiatives;   changes  in  business  strategy  or
     development plans; management of growth;

-    Availability, terms and deployment of capital;

-    Costs and other effects of legal and administrative proceedings;

-    Dependence  on  senior  management;  business  abilities  and  judgment  of
     personnel;  availability of qualified personnel; labor and employee benefit
     costs;

<PAGE>


-    Development risks; risks relating to the availability of financing, and

-    Other factors referenced in this report.

Because the risks  factors  referred to above could cause actual  results or
outcome to differ  materially  from those  expressed in any  forward-looking
statements  made by us,  you  should not place  undue  reliance  on any such
forward-looking  statements.  Other  factors may be  described  from time to
time in our  filings  with the  Securities  and  Exchange  Commission,  news
releases and other  communications.  Further, any forward-looking  statement
speaks  only  as of the  date  on  which  it is  made  and we  undertake  no
obligation  to  update  any  forward-looking   statement  or  statements  to
reflect  events or  circumstances  after the date on which such statement is
made or to reflect  the  occurrence  of  unanticipated  events.  New factors
emerge from time to time,  and it is not  possible  for us to predict  which
will arise.  In addition,  we cannot assess the impact of each factor on our
business or the extent to which any factor,  or combination of factors,  may
cause  actual  results  to differ  materially  from those  contained  in any
forward-looking statements.

Subsequent written and oral  forward-looking  statements  attributable to us
or persons  acting on our behalf are expressly  qualified in their  entirety
by the  cautionary  statements  set forth above and  contained  elsewhere in
this Annual Report on Form 10-KSB.

OVERVIEW

We develop  Enterprise and Customer  Relationship  Management (CRM) software
for our clients and for general distribution.

Our revenue is from CRM,  database,  and technical  services to our clients.
Our main software product to date is called "Relata".

Our  products are designed to allow  enterprises  to improve the  efficiency
of  knowledge  workers  through  the use of our  web-based  software  tools.
These  tools  allow  enterprises  to  manage   relationships  and  contacts,
administer and organize time  allocations,  collaborate with others,  manage
data, automate communications and productivity  reporting,  and conduct data
synchronization.

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

<PAGE>


People and  businesses  who are  interested in using or testing our software
come to our software  download  website to download  (acquire) our software,
to read  documentation  that can help them  understand the software  better,
and to submit  questions to our technical  support staff. The portion of our
software  that is open source  carries no licensing  fees,  so it is free to
download. To quantify the demand for our software, two metrics we use are:

(a) the number of downloads per month
(b) the number of distinct  individuals  accessing the download website each
    month

The first  measurement  tells us how many people  downloaded  (acquired) our
software  in each  month.  The second  measurement  tells us how many people
came to the  website  each month to read our  software  documentation  or to
submit  technical   questions  to  our  staff  or  to  simply  acquire  more
software.  The two  measurements,  while  different  from  each  other,  are
highly  correlated,  and tend to vary  positively  with each other.  We have
noticed an overall  trend  showing an increase in both  measurements  during
the past year.  Download  and distinct  user  session data for  downloads of
our open  source  software  have been  tracked by us since June 2001 and was
as follows:




                                           DISTINCT
MONTH               DOWNLOADS            USER SESSIONS
--------            ---------            -------------
Jun 2001                  563               1,941
Jul 2001                  714               2,177
Aug 2001                  721               1,720
Sep 2001                1,384               3,044
Oct 2001                1,673               3,357
Nov 2001                1,307               2,706
Dec 2001                1,716               2,550
Jan 2002                2,023               3,853
Feb 2002                2,727               3,543
Mar 2002                3,168               4,311
Apr 2002                8,263               4,139
May 2002                2,252               3,829
Jun 2002                2,979               3,533
Jul 2002                3,118               3,939
Aug 2002                2,117               4,380
Sep 2002                3,442               4,513
Oct 2002                3,544               4,583
Nov 2002                3,264               4,150
Dec 2002                3,030               3,855
Jan 2003                4,010               4,579
Feb 2003                2,449               3,341


<PAGE>


We were  incorporated  under the laws of the State of Nevada on November 18,
1998,  and commenced  operations in January 1999. Our offices are located at
34595  3rd  Avenue,  Suite  101,  Abbotsford,   BC,  V2S.8B7,   Canada.  The
telephone number is (604) 504-5811.

CRITICAL ACCOUNTING POLICIES
----------------------------

In the  ordinary  course  of  business,  the  company  has made a number  of
estimates  and   assumptions   relating  to  the  reporting  of  results  of
operations  and  financial  condition in the  preparation  of its  financial
statements in conformity with accounting  principles  generally  accepted in
the United  States.  Actual  results could differ  significantly  from those
estimates  under different  assumptions and conditions.  We believe that the
following  discussion  addresses  our  most  critical  accounting  policies,
which are those that are most  important to the  portrayal of our  financial
condition and results.  We are constantly  re-evaluating  those  significant
factors  and  makes  adjustments  where  facts  and  circumstances  dictate.
Historically,  actual  results have not  significantly  deviated  from those
determined  using the necessary  estimates  inherent in the  preparation  of
financial  statements.  Estimates  and  assumptions  include,  but  are  not
limited to, customer receivables,  inventories,  office equipment, databases
and domain name  lives,  deferred  income tax  benefits,  contingencies  and
litigation.  We have also chosen  certain  accounting  policies when options
were available.  Significant accounting policies include:

* The first-in, first-out (FIFO) method to value our inventories; and

* The  intrinsic  value  method,  or APB  Opinion No. 25, to account for our
common stock incentive awards; and

*  We  record  an  allowance   for  credit  losses  based  on  estimates  of
customers'  ability to pay.  If the  financial  condition  of our  customers
were to deteriorate, additional allowances may be required.

*We have not recorded an  allowance  for credit  losses  related to our note
receivable.   Should   the   financial   condition   of  the   note   issuer
deteriorate, additional allowances may be required.

*We are  amortizing  our databases and domain names over three years and two
years, respectively, their estimated remaining useful lives.

*Software  development  and  implementation  costs  are  expensed  until the
Company  determines  that  the  software  will  result  in  probable  future
economic  benefits  and  management  has  committed  to funding the project.
Thereafter,  all direct external  implementation costs and purchase software
costs are  capitalized  and amortized  using the  straight-line  method over
remaining  estimated  useful lives,  generally not exceeding five years.  To
date,  such costs are not  significant.  The  Company  only  recently  began
developing prepackaged software for sale to potential customers.

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


<PAGE>


RESULTS OF OPERATIONS

REVENUES
--------

Revenues for the year ended December 31, 2002,  were  $430,240,  compared to
revenues of $2,360,452  for the year ended  December 31, 2001.  Revenues for
the three  months  ended  December  31,  2002,  were  $10,705,  compared  to
revenues of  $1,456,067  for the three  months  ended for the same period in
2001.  Revenues  have  remained  down  primarily  because  of our  focus  on
developing our new  proprietary  software  products,  which has taken longer
than  expected,  resulting  in more time being taken away from the sales and
marketing  of  our  traditional  product  line.  As  of  December  2002,  we
released  to the  public  a new  software  product.  This  is a  proprietary
software  product and is  available  on a trial basis to  interested  users.
However,   our  primary  proprietary  software  product  has  not  yet  been
released,  and we  anticipate  its  release  in the early part of the second
quarter  of  2003.  It  will  be  made  available  to  users  on  a  monthly
subscription basis.

OPERATING EXPENSES
------------------

Operating  expenses  for the years ended  December  31, 2002 and 2001,  were
$579,762  and  $1,607,102,   respectively.   The  2002  operating   expenses
consisted of $255,750 stock  compensation  expense recognized as a result of
options  being  granted at less than fair market value to a key sales person
in  May  2002;   $111,641  of  sales  commissions;   $94,345  of  wages  and
subcontracting  costs;  $79,238  of  marketing  expenses;  $26,235  was  for
hardware  costs  incurred  on sales for our systems  integration  solutions;
and  $12,553 of such  expenses  consisted  of Internet  connectivity  costs.
Hardware  costs  decreased  significantly  as a  result  of  the  previously
mentioned discontinuation in this product line.


<PAGE>



GENERAL AND ADMINISTRATIVE EXPENSES
-----------------------------------

General and  Administrative  (G&A) expenses for the years ended December 31,
2002 and  2001,  were  $710,689  and  $441,571,  respectively.  For the year
ended 2002,  $281,326  consisted of depreciation and amortization;  $181,514
consisted  of  legal,   accounting,   and  consulting   fees,  of  which,  a
substantial  portion  of these  fees are  incurred  because  we are a public
company;  and $122,710 of management  fees for the services of our executive
management.  A significant  portion of the databases  acquired at the end of
2001 were placed into  service and led to the increase in  depreciation  and
amortization from $91,459 of such expense for the year ended 2001.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

As of December 31, 2002,  we had  $134,093 in cash and cash  equivalents,  a
decrease of $1,131,364  since  December 31, 2001,  and a decrease of 153,898
since  September 30, 2002. The  significant  decrease in cash as compared to
the prior year end is primarily  attributable  to two  factors:  losses from
operations in 2002 and a delay in cash  disbursements  for three significant
operational  expenses  at the  end  of  2001.  Losses  from  operations  may
continue  in the  future as we shift our  revenue  model  from our  existing
product  line  to  developing  and  selling  new  proprietary  software.  If
revenues  and  spending  levels  are not  adjusted  accordingly,  we may not
generate  sufficient  revenues to achieve sustained  profitability.  Even if
sustained  profitability  is achieved,  we may not sustain or increase  such
profitability  on a quarterly or annual  basis in the future.  Our policy is
to pay all  operational  expenses  when due,  provided  the  vendor,  in the
normal  course of business,  has  satisfied  all  necessary  conditions  for
payment.   As  a  result,  we  had  outstanding  payable  balances  totaling
approximately  $60,000  with 26  vendors  at the end of 2002  that  remained
unpaid by us. As of December 31, 2002,  our  accounts  payable  aging was as
follows:



Current          $  22,112
31-60  days         25,240
61-90  days          8,541
91+  days            3,628
                 ---------
Total            $  59,521
                 =========



We have no  long-term  debt.  We have  reduced our  expenses  by  downsizing
staff and closing one of our offices.  We believe that our  available  cash,
together with operating  revenues,  will be sufficient to fund our immediate
working  capital  requirements.  We  further  believe  that we can  generate
sufficient  liquidity to carry out our  operational  activities.  We have no
long-term   employment   contracts  and  can  reduce  our   work-force,   as
necessary,   if  revenues  are  not   sufficient  to  support  our  existing
operations or until additional funding can be obtained.


<PAGE>

We will require  additional  capital to fund  operations,  take advantage of
acquisition  opportunities,  develop  or  enhance  services,  or  respond to
competitive  pressures.  We cannot be certain that any  required  additional
financing  will be available on terms  favorable to us. If additional  funds
are raised by the  issuance  of our equity  securities,  such as through the
issuance  and  exercise  of  warrants,   then  existing   stockholders  will
experience  dilution of their ownership  interest.  If additional  funds are
raised  by the  issuance  of debt or  other  equity  instruments,  we may be
subject to certain  limitations  in our  operations,  and  issuance  of such
securities  may have rights senior to those of the then existing  holders of
common  stock.  If adequate  funds are not  available  or not  available  on
acceptable  terms,  we may be unable to fund  expansion,  develop or enhance
services or respond to competitive pressures.

Going Concern Consideration

Our  activities  have been  supported by available cash on hand and revenues
generated  from the sales of our products and services.  As indicated in the
accompanying  balance  sheet,  at  December  31,  2002 we had  approximately
$134,093 in cash and after  approximately  $66,455 of  liabilities  had only
approximately  $67,638 in working  capital.  For the year ended, we have had
a loss from  operations  of  approximately  $914,645.  Further,  losses  are
continuing  subsequent  to December 31, 2002.  We are in need of  additional
financing  or a  strategic  arrangement  in order to  continue  our  planned
activities  for the  remainder of the current  fiscal year.  These  factors,
among  others,   indicate  that  the  company  may  be  unable  to  continue
operations  in the  future as a going  concern.  Our plans to deal with this
uncertainty  include further reducing  expenditures  and raising  additional
capital or entering into a strategic  arrangement with a third party.  There
can be no assurance that management's  plans to reduce  expenditures,  raise
capital  or  enter  into  a  strategic   arrangement  can  be  realized.  No
adjustment  has been made in the  accompanying  financial  statements to the
amounts and  classification  of assets and  liabilities  which could  result
should the company be unable to continue as a going concern.

Risks Factors

Risks relating to the company

RISK FACTORS RELATING TO OUR BUSINESS

We were organized in November 1998 and thus have limited  operating  history
and limited operating revenues.

Specifically,  as an early stage entity in the rapidly  evolving  market for
software and technical  services,  we face numerous risks and  uncertainties
including our ability to:

o    anticipate and adapt to changing technologies;
o    generate significant revenues from the provision of our services;
o    develop a more efficient sales force;
o    implement sales and marketing initiatives;
o    offer compelling and effective services and software;
o    attract, retain and motivate qualified personnel;
<PAGE>


o    respond and adjust to actions taken by competitors;
o    build  operations  and  technical  infrastructure  to  effectively  manage
     growth; and
o    integrate new technologies and services.

We have a major  task  ahead of us and may not be  successful  in  achieving
our goals.

WE NEED TO GROW AND MANAGE OUR GROWTH TO MAINTAIN PROFITABILITY.

Although  we  reported  positive  net  income in the first  quarter  of this
year,  losses  from  operations  may occur in the future as we  continue  to
grow  the  business.  If  revenues  and  spending  levels  are not  adjusted
accordingly,  we may not generate  sufficient  revenues to achieve sustained
profitability.  Even if  sustained  profitability  is  achieved,  we may not
sustain or increase  such  profitability  on a quarterly  or annual basis in
the future.

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

OUR QUARTERLY  RESULTS OF OPERATIONS  MAY  FLUCTUATE  SIGNIFICANTLY  AND ARE
DIFFICULT TO FORECAST.

Due to  our  limited  operating  history  and  the  unpredictability  of our
industry,  our revenue  and net income  (loss) may  fluctuate  significantly
from  quarter  to  quarter  and  are  difficult  to  forecast.  Many  of our
expenses  are fixed in the  short  term.  We may not be able to  adjust  our
spending   quickly  if  our  revenue   falls  short  of  our   expectations.
Accordingly,  a revenue  shortfall  in a  particular  quarter  would  have a
disproportionate  adverse  effect on our net income (loss) for that quarter.
Further,  we may make  administrative,  marketing,  acquisition or financing
decisions that could adversely  affect our business,  operating  results and
financial condition.

Our quarterly operating results will fluctuate for many reasons, including:

-  our ability to retain existing customers, attract new customers and
   satisfy our customers' demand;
-  changes in gross margins of our current and future services;
-  the timing of the release of upgraded versions of our software;
-  introduction of new software and services by us or our competitors;
-  changes in the market acceptance of our software solutions;
-  changes in the usage of the Internet and online services;
-  the effects of any  acquisitions  or other business  combinations,  including
   one-time  charges,   goodwill   amortization  and  integration   expenses  or
   operational difficulties; and
-  technical  difficulties  or system  downtime  affecting the Internet or our
   website.


<PAGE>

For these reasons,  you should not rely on  period-to-period  comparisons of
our  financial  results  to  forecast  our  future  performance.  Our future
operating  results may fall below  expectations  of  securities  analysts or
investors,  which would likely  cause the trading  price of our common stock
to decline significantly.

WE HAVE EXPERIENCED RAPID GROWTH,  WHICH HAS PLACED A SIGNIFICANT  STRAIN ON
OUR RESOURCES.

Since  January 1, 2000 we have  experienced a period of growth and expansion
which has placed,  and  continues  to place,  demands on our  resources.  We
expect future growth,  if any, to place further  demands on our  operational
and financial resources.

To accommodate our anticipated growth we must:

-  improve  existing  operational  and  financial  systems,   procedures  and
   controls;
-  hire, train and manage additional qualified personnel, including sales and
   marketing,  professional services and software engineering and development
   personnel; and
-  effectively manage multiple  relationships  with our customers,  suppliers
   and other third parties.

We may  not be  able to  install  and  implement  adequate  operational  and
financial  systems,  procedures  and  controls  in an  efficient  and timely
manner,  and  our  current  or  planned  systems,  procedures  and  controls
may not be  adequate  to support  our future  operations.  The  difficulties
associated with installing and  implementing  these new systems,  procedures
and  controls  may  place a  significant  burden on our  management  and our
internal  resources.  If we are  unable  to  manage  growth  effectively  it
could have a material  adverse  effect on our  business,  operating  results
and financial condition.


OUR CHANCES OF SUCCESS  WILL BE  DIMINISHED  IF WE LOSE THE  SERVICES OF OUR
OFFICERS OR  POTENTIAL  CONFLICTS  OF INTEREST  BETWEEN OUR BUSINESS AND OUR
OFFICERS ARE NOT RESOLVED IN OUR FAVOR.

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

ANY REVENUES  RECEIVED IN CANADIAN  DOLLARS WOULD  DECREASE IN VALUE BECAUSE
OF THE UNFAVORABLE CURRENCY EXCHANGE RATE.


<PAGE>

Our  operations are located in Canada.  Accordingly,  some of our revenue is
in Canadian  dollars.  In recent  years,  the currency  exchange rate of the
Canadian  dollar  into the US dollar has  steadily  dropped.  The  continued
lowering of the value of the  Canadian  dollar  vis-a-vis  the US dollar may
have a materially  adverse  effect on our  business,  results of  operations
and financial condition.

OUR SOFTWARE MAY CONTAIN  DEFECTS  THAT MAY HARM OUR  REPUTATION,  BE COSTLY
TO CORRECT, DELAY REVENUE AND EXPOSE US TO LITIGATION.

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

WE MAY BE SUED AS A RESULT OF INFORMATION RETRIEVED FROM OUR WEB SITE.

We may be  subjected  to claims for  defamation,  negligence,  copyright  or
trademark
infringement  or other claims  relating to the information we publish on our
website.  These types of claims have been brought,  sometimes  successfully,
against  online  services in the past.  We could also be subjected to claims
based on  content  that is  accessible  from our  website  through  links to
other  websites  or  through  content  and  materials  that may be posted by
visitors  to our  website.  Our  insurance  may not  adequately  protect  us
against these types of claims.

OUR  SECURITIES  ARE REFERRED TO AS "PENNY  STOCKS"  WHICH ARE NOT PRECEIVED
FAVORABLY IN THE MARKET PLACE.

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

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


<PAGE>

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

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

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

o  provide the purchaser with current quotations for the securities;

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

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

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

Risks Relating to our Strategy and our Industry

RISKS RELATED TO SOFTWARE BUSINESS MODELS.

The  market  for our  software  is still  developing.  The  markets  for our
services   have  only   recently   begun  to  develop.   Demand  and  market
acceptance for software  developed under our development  model and services
relating to these  products are subject to a high level of  uncertainty  and
risk.  If our  software  and the  services  should  fail to gain  widespread
commercial  acceptance,  our  business,   operating  results  and  financial
condition would be materially
adversely affected.

WE  FACE  INTENSE  COMPETITION  FROM  ESTABLISHED  SOFTWARE  DEVELOPERS  AND
SERVICE PROVIDERS.

The  market  for  Enterprise  and  Customer  Relationship  Management  (CRM)
software  and  the  services  which  run  on  these  types  of  software  is
intensely   competitive   and   rapidly   changing.   We  face   significant
competition  from larger  companies  with greater  financial  resources  and
name  recognition than we have.  These  competitors  include Siebel Systems,
SAP, Pivotol and dozens of others,  all of whom have  significantly  greater
financial  resources and offer more advanced  software  tools than we do. If
we  are  not  able  to   compete   successfully   with   current  or  future
competitors,  our business,  operating results and financial  condition will
be materially adversely affected.


<PAGE>

WE FACE INTENSE  COMPETITION FROM OTHER SOFTWARE AND SERVICE SUPPLIERS,  AND
NEW COMPETITORS MAY ENTER OUR MARKETS EASILY.

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

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

WE MAY NOT SUCCEED IN THE EXPANSION OF OUR SERVICES.

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

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

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

-  difficulty  assimilating  the operations,  technology and personnel of the
   combined companies;
-  disruption of our ongoing business;
-  problems retaining key technical and managerial personnel;
-  one-time  in-process research and development charges and ongoing expenses
   associated with  amortization  of goodwill and other purchased  intangible
   assets;
-  potential dilution to our stockholders;

-  additional operating losses and expenses of acquired businesses; and


<PAGE>

-  impairment  of  relationships  with  existing  employees,   customers  and
   business partners.

Our  inability to address these risks could have a material  adverse  effect
on our
business, operating results and financial condition.

COMPETITION FOR SKILLED TECHNICAL PERSONNEL IN OUR INDUSTRY IS INTENSE.

Our future  performance  also depends upon our ability to attract and retain
highly qualified  programming,  technical,  sales,  marketing and managerial
personnel.   There   is   intense   competition   for   skilled   personnel,
particularly  in the field of  software  engineering.  If we do not  succeed
in retaining  our  personnel or in attracting  new  employees,  our business
could suffer significantly.

IN  ORDER  TO KEEP UP WITH  TECHNOLOGICAL  ADVANCES,  WE MAY  HAVE TO  INCUR
ADDITIONAL COSTS TO MODIFY SERVICES OR INFRASTRUCTURE.

Our market is  characterized  by  rapidly  changing  technologies,  evolving
industry  standards,   frequent  new  service   introductions  and  changing
customer  demands.  To be  successful,  we must adapt to a rapidly  evolving
market by continually  enhancing our  infrastructure,  content,  information
and services to fulfill our users' needs.  We could incur  additional  costs
if it becomes  necessary to modify  services or  infrastructure  in order to
adapt to these or other changes  affecting  providers of Internet  services.
Our  business,  results  of  operations  and  financial  condition  could be
materially  adversely  affected if we incur  significant  costs to adapt, or
if we cannot adapt, to these changes.

IF  WE  DO  NOT  IMPROVE  OUR  SALES  CAPABILITIES,   WE  MAY  NOT  GENERATE
SIGNIFICANT REVENUES OR BECOME PROFITABLE.

We currently  have a limited  sales  capability.  In order to grow,  we must
develop  a  larger  sales  capability.  Our  ability  to do so  successfully
involves a number of factors.  They  include the  competition  in hiring and
retaining  sales  personnel,  our ability to integrate  and  motivate  sales
personnel  and the  length  of time it  takes  for new  sales  personnel  to
become  effective.  Our failure to develop and maintain an  effective  sales
team would have a
negative effect upon our business prospects.


Item 7. Financial Statements.

The response to this item is included in a separate section of this report. See
page F-1.


<PAGE>

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

NONE.


                                   PART III
                                   --------

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

Set forth  below is certain  information  concerning  each person who served
as an  executive  officer  during the year  ended  December  31,  2002 or is
presently  a director  of the  Company.  All  officers  and  directors  hold
office  until their  respective  successors  are elected and  qualified,  or
until  their   earlier   resignation   or  removal.   There  are  no  family
relationships among any of our directors or executive officers.

The  following  sets forth the names and ages of our directors and executive
officers:

Name               Age   Position
----               ---   --------

Trevor Newton      33    President, Secretary, Treasurer, Chairman of the Board,
                         Chief Operating and Executive Officer

Fred Coombes       49    Vice President of Corporate Development and Director

Scott Praill       34    Director


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

<PAGE>

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

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

None of our directors holds any  directorships  in companies with a class of
securities  registered  pursuant  to Section 12 of the  Securities  Exchange
Act or  subject  to the  requirements  of  Section  15(d) of such Act or any
company  registered as an investment  company under the  Investment  Company
Act of 1940, as amended.

During the 2002 fiscal  year,  we paid fees of $75,000  for the  services of
Mr. Trevor Newton,  the President,  Chief Executive  Officer,  Secretary and
Treasurer,  and $47,710  for the  services  of Mr.  Fred  Coombes,  the Vice
President of Corporate  Development.  Mr. Praill was granted 100,000 options
pursuant  to the  2002  Stock  Option  Plan to  purchase  common  stock at a
purchase  price of $1.30  per  share.  Of these  options,  only  10,000  are
currently  vested.  The  balance of his options  vest as follows:  15,000 on
June 23,  2003;  15,000 on June 23,  2004;  20,000  on  December  31,  2004;
20,000 on June 23, 2005 and 20,000 on December 31, 2002.

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

Meetings and Committees of the Board of Directors

Our Board of Directors  conducts its business  through meetings of the Board
and  through  activities  of its  committees.  During the fiscal  year ended
December  31,  2002,  the Board of  Directors  held 4 regular  meetings.  No
director  attended  fewer  than  100% of the  total  meetings  of the  Board
either in person or via teleconference during 2002.

<PAGE>

The Board of Directors  has  established  an Audit  Committee  and adopted a
written   charter  setting  out  the  duties  and  functions  of  the  Audit
Committee.  Mr. Praill,  the chairman of the Audit  Committee,  is the audit
committee  financial  expert  and is  independent,  as such  term is used in
Item  7(d)(3)(iv)  of Schedule 14A of the  Securities  Exchange Act of 1934,
as amended.  The Audit  Committee  recommends  engagement  of the  company's
independent  auditors,  is primarily  responsible for approving the services
perform by the  independent  auditors and for reviewing and  evaluating  our
accounting  principles  and its system of internal  accounting  controls and
has general responsibility in connection with related matters.

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

The Board does not have a nominating committee.

Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a)  of  the  Exchange  Act  requires  the  Company's   executive
officers,  directors  and  persons who  beneficially  own more than 10% of a
registered  class  of the  Company's  equity  securities  to file  with  the
Commission   initial   reports  of  ownership  and  reports  of  changes  in
ownership of Common Stock and other equity  securities of the Company.  Such
persons are required by Commission  regulations  to furnish the Company with
copies of all Section 16(a) forms they filed.

We are not  aware of any  instances  in fiscal  year 2002 when an  executive
officer,  director or owners of more than 10% of the  outstanding  shares of
our  common  stock  failed  to comply  with the  reporting  requirements  of
Section 16(a) of the  Securities  Exchange Act of 1934,  other than the Form
3 which should have been filed by our director Scott Praill.

Item 10. Executive Compensation.

The following table sets forth  information  with respect to compensation we
paid for the years ended  December 31, 2002,  2001 and 2000, for services of
Trevor Newton,  our Chairman,  President,  Chief  Executive  Officer,  Chief
Operating Officer,  Secretary and Treasurer.  We have not paid any executive
officer in excess of $100,000  (including  salaries and benefits) during the
years ended December 31, 2002, 2001 or 2000.

Summary of Annual Compensation

<PAGE>


<TABLE>
<CAPTION>
Name and                            Year ended             Year ended           Period ended
Principal Position                  December 31, 2002      December 31, 2001    December 31, 2000
------------------                  -----------------      -----------------    -----------------
<S>                                          <C>                     <C>                <C>
Trevor Newton, Chairman of
the Board, President, Secretary,
Treasurer and Chief Operating and
Executive Officer                            $75,000                 $60,000            $60,000
</TABLE>



                    OPTION/SAR GRANTS IN LAST FISCAL YEAR
                             (Individual Grants)

<TABLE>
<CAPTION>
----------------------------- -------------------------- -------------------- --------------- ------------------------
                                                          Percent Of Total
                                                            Options/SARs
                                Number Of Securities         Granted To        Exercise or
                               Underlying Options/SARs      Employees In        Base Price
            Name                     Granted (#)             Fiscal Year          ($/Sh)          Expiration Date
            (a)                          (b)                     (c)               (d)                  (e)
----------------------------- -------------------------- -------------------- --------------- ------------------------
<S>                           <C>                        <C>                  <C>             <C>
Trevor Newton, President,
Secretary, Treasurer,
Chairman of the Board of
Directors, Chief Operating
and Executive Officer                   None                    None               None                None
----------------------------- -------------------------- -------------------- --------------- ------------------------
</TABLE>




              AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                        AND FY-END OPTIONS/SAR VALUES

<TABLE>
<CAPTION>
------------------------------------ ------------------- -------------------- -------------------- -------------------
                                                                                   Number Of
                                                                                  Unexercised           Value Of
                                                                                  Securities          Unexercised
                                                                                  Underlying          In-The-Money
                                                                                Options/SARs At      Options/SARs At
                                      Shares Acquired                             FY-End (#)           FY-End ($)
                                        On Exercise        Value Realized        Exercisable/         Exercisable/
               Name                         (#)                  ($)             Unexercisable       Unexercisable
                (a)                         (b)                  (c)                  (d)                 (e)
------------------------------------ ------------------- -------------------- -------------------- -------------------
<S>                                  <C>                 <C>                  <C>                  <C>
Trevor Newton, President,
Secretary, Treasurer, Chairman of
the Board of Directors, Chief
Operating and Executive Officer             None                None              $225,000/$0         $180,000/$0
------------------------------------ ------------------- -------------------- -------------------- -------------------
</TABLE>


We have no employment agreements with any of our executive officers or
employees.

<PAGE>


During the 2002 fiscal  year,  we paid fees of $75,000  for the  services of
Mr. Trevor Newton,  the President,  Chief Executive  Officer,  Secretary and
Treasurer,  and $47,710  for the  services  of Mr.  Fred  Coombes,  the Vice
President of Corporate Development.

We  have  no  employment  or  any  similar  agreements  with  the  foregoing
individuals.  During  the 2001  fiscal  year,  we loaned to each of  Messrs.
Newton  and  Coombes  $200,000  and  $175,000,   respectively,  to  exercise
options  held  by  such  individuals.  The  notes  receivable  from  each of
Messrs.  Newton and  Coombes  are  non-interest  bearing  and are to be paid
from the proceeds from the sale of the stock  acquired  through the exercise
of the stock  options.  If no stock is sold,  the notes are due and  payable
on April 1, 2003.  As of the date of this  report,  neither  Mr.  Newton nor
Mr. Coombes has sold any shares of our stock.


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

The  following  table lists,  as of March 24, 2003,  the number of shares of
common  stock  beneficially  owned by (i) each person or entity  known to us
to be the  beneficial  owner  of  more  than  5% of our  outstanding  common
stock;  (ii)  each of our  officers  and  directors;  and  (iii)  all of our
officers  and  directors  as a group.  Information  relating  to  beneficial
ownership of common stock by our principal  stockholders  and  management is
based  upon   information   furnished  by  each  person  using   "beneficial
ownership"   concepts  under  the  rules  of  the  Securities  and  Exchange
Commission.  Under these rules, a person is deemed to be a beneficial  owner
of a security  if that person has or shares  voting  power,  which  includes
the  power to vote or  direct  the  voting of the  security,  or  investment
power,  which  includes  the  power  to vote or  direct  the  voting  of the
security.  The  person  is  also  deemed  to be a  beneficial  owner  of any
security  of which that person has a right to acquire  beneficial  ownership
within 60 days.  Under the Securities and Exchange  Commission  rules,  more
than  one  person  may be  deemed  to be a  beneficial  owner  of  the  same
securities,  and a  person  may  be  deemed  to  be a  beneficial  owner  of
securities  as to  which he or she may not  have  any  pecuniary  beneficial
interest.

The  percentages  below are calculated  based on 8,033,372  shares of common
stock  issued  and  outstanding,  plus in the case of a  person  who has the
right to acquire  additional  shares  within 60 days,  any new shares  which
would be issued to effect such acquisition.


<TABLE>
<CAPTION>
      Officers, Directors,
         5% Shareholder                         No. of Shares                 Beneficial Ownership %
         --------------                         -------------                 ----------------------
<S>                                             <C>                                   <C>
Trevor Newton                                   2,935,400        (1)                  36.54%
c/o Stratabase
34595 3rd Avenue
Abbotsford, B.C.
V2S 8B7 Canada
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
<S>                                             <C>                                   <C>
Mary Martin                                     1,122,072        (2)                  13.97%
248 West Park Avenue
Long Beach, NY 11561

Fred Coombes                                    1,042,300        (3)                  12.97%
c/o Stratabase
34595 3rd Avenue
Abbotsford, B.C.
V2S 8B7 Canada

New Horizons LP                                   538,925                              6.71%
248 West Park Avenue
Long Beach, NY  1151
Scott Praill
c/o Stratabase
34595 3rd Avenue                                                                   Less than 1%
Abbotsford, B.C.                                   10,000        (4)
V2S 8B7 Canada
All Directors and executive
officers as a Group (3 persons)*                4,049,061                              50.4%
</TABLE>

__________

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

(2)      The  general  partner  and  a  minority   limited  partner  of  New
Horizons  LP is Joe  MacDonald,  who is married to Mary  Martin.  The number
indicated  above does not include the shares  owned by New  Horizons LP, all
of which Ms. Martin disclaims beneficial ownership.

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

(4)      Scott  Praill was  granted  100,000  options  pursuant  to the 2002
Stock  Option Plan to  purchase  common  stock at a purchase  price of $1.30
per share. Of these options,  only 10,000 are currently vested.  The balance
of his options  vest as  follows:  15,000 on June 23,  2003;  15,000 on June
23, 2004;  20,000 on December  31, 2004;  20,000 on June 23, 2005 and 20,000
on December 31, 2002.

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


<PAGE>

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


Item 12.  Certain Relationships and Related Transactions

During the 2002 fiscal  year,  we paid fees of $75,000  for the  services of
Mr. Trevor Newton,  the President,  Chief Executive  Officer,  Secretary and
Treasurer,  and $47,710  for the  services  of Mr.  Fred  Coombes,  the Vice
President of Corporate Development.

We  have  no  employment  or  any  similar  agreements  with  the  foregoing
individuals.  During  the 2001  fiscal  year,  we loaned to each of  Messrs.
Newton  and  Coombes  $200,000  and  $175,000,   respectively,  to  exercise
options  held  by  such  individuals.  The  notes  receivable  from  each of
Messrs.  Newton and  Coombes  are  non-interest  bearing  and are to be paid
from the proceeds from the sale of the stock  acquired  through the exercise
of the stock  options.  If no stock is sold,  the notes are due and  payable
on April 1, 2003.  As of the date of this  report,  neither  Mr.  Newton nor
Mr. Coombes has sold any shares of our stock.


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


(a)   Exhibits.

Exhibit No.  Description
-----------  -----------

3.1          Certificate of Incorporation of Registrant.*
3.2          Registrant's    Certificate   of   Amendment   of   Registrant's
             Certificate of Incorporation.*
3.3          By-Laws of Registrant.*
4.1          Specimen common stock Certificate.*


10.2         Lease with SGS Enterprises.*
10.3         Internet Business Service Agreement with BCTEL.*
10.4         Distributor Agreement with COMTEX*
10.5         Stock Option Plan **
10.6         Internetworking   Services   Agreement   with   Telus   Advanced
             Communications.*
10.7         Lease Agreement with George P. and Sandra J. Andreasen*
10.8         2002 Stock Option Plan***
24.2         Consent of Moss Adams LLP.


<PAGE>


99.1         Certification  of  Principal  Executive  and  Financial  Officer
             Pursuant to 18 U.S.C Section 1350 as Adopted Pursuant to Section
             906 of the Sarbanes-Oxley Act of 2002.



*    Previously filed with the Company's Form SB-2 on August 8, 1999.
**   Previously filed with the Company's Form S-8 on January 29, 2000.
***  Previously filed with the Company's Form S-8 filed on February 12, 2002.



     (b)  Reports on Form 8-K.

          None.


Item 14. Controls and Procedures.


     As of a date (the  "Evaluation  Date") within the 90-day period prior to
the filing of this report,  we carried out an evaluation of the effectiveness
of our  disclosure  controls and  procedures (as defined by Rule 15d-14(c) of
the  Securities  Exchange  Act of 1934)  under the  supervision  and with the
participation  of our chief executive  officer and chief  financial  officer.
Based on and as of the date of such evaluation,  the aforementioned  officers
have concluded that our disclosure controls and procedures were effective.

     We also  maintain  a system  of  internal  accounting  controls  that is
designed  to  provide  assurance  that our assets  are  safeguarded  and that
transactions are executed in accordance with  management's  authorization and
properly  recorded.  This system is continually  reviewed and is augmented by
written  policies  and  procedures,  the careful  selection  and  training of
qualified   personnel   and  an  internal   audit   program  to  monitor  its
effectiveness.  Since the  Evaluation  Date,  there have been no  significant
changes to this system of internal  controls or in other  factors  that could
significantly affect those controls.





<PAGE>

                                  SIGNATURES
                                  ----------

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


Dated: March 31, 2003        STRATABASE


                             By /s/ Trevor Newton
                                -----------------------------
                                Trevor Newton
                                Chairman, President, Chief Executivevor
                                Officer, Secretary and Treasurer

                            By  /s/ Fred Coombes
                                -----------------------------
                                Fred Coombes
                                Vice President of Corporate
                                Development


     In  accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant  and in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                       <C>                                  <C>
                                          Chairman, President, Chief           Dated: March 31, 2003
   /s/ Trevor Newton                      Executive
   -------------------------              Officer, Secretary and Treasurer
   Trevor Newton                          (Principal  Executive Officer and
                                          Principal Financial Officer)


    /s/ Fred Coombes                      Vice President of Corporate          Dated:  March 31, 2003
    ------------------------              Development
    Fred Coombes


    /s/ Scott Praill                      Director                             Dated:  March 31, 2003
    ------------------------
    Scott Praill


</TABLE>


<PAGE>

                                   STRATABASE
                                   __________

                          INDEPENDENT AUDITOR'S REPORT
                                       AND
                              FINANCIAL STATEMENTS
                                   __________

                           DECEMBER 31, 2002 AND 2001




<PAGE>

INDEPENDENT AUDITOR'S REPORT


The Board of Directors and Shareholders
Stratabase


We have audited the  accompanying  balance sheets of Stratabase,  as of December
31, 2002 and 2001, and the related  statements of operations  and  comprehensive
income (loss),  changes in  shareholders'  equity,  and cash flows for the years
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted the audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Stratabase,  as of December 31,
2002 and 2001,  and the  changes  in 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 3 to the
financial  statements,  the Company experienced a significant reduction in their
revenues  in 2002 and changed  their  revenue  focus to a new product  line with
untested revenue  potential.  These conditions raise substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans regarding
those  matters are also  described in Note 3. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.




Portland, Oregon
February 26, 2003





                                       1
<PAGE>

STRATABASE
BALANCE SHEETS
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                             ASSETS

                                                              December 31,
                                                       --------------------------
                                                          2002           2001
                                                       -----------    -----------
CURRENT ASSETS
<S>                                                    <C>            <C>
      Cash                                             $   134,093    $ 1,265,457
      Receivables:
          Trade accounts                                     3,274         21,315
          Employee and other                                20,165         12,208
          Allowance for doubtful accounts                   (3,500)        (8,500)
      Note receivable, including accrued interest          171,206           --
      Inventory                                             28,450         21,363
      Refundable income taxes                               62,844           --
      Prepaid expenses                                       2,603           --
                                                       -----------    -----------

               Total current assets                        419,135      1,311,843
                                                       -----------    -----------

OFFICE EQUIPMENT
      Computer hardware                                     76,499         75,597
      Computer software                                     12,924         12,427
      Office furniture and equipment                        12,137         12,137
                                                       -----------    -----------

               Total office equipment                      101,560        100,161
      Less accumulated depreciation and amortization       (56,571)       (40,571)
                                                       -----------    -----------

               Office equipment, net                        44,989         59,590

OTHER ASSETS
      Deferred income taxes, net                              --           45,548
      Databases and domain names, net                      518,914        629,479
                                                       -----------    -----------

               Total other assets                          518,914        675,027
                                                       -----------    -----------

TOTAL ASSETS                                           $   983,038    $ 2,046,460
                                                       ===========    ===========
</TABLE>



2
--------------------------------------------------------------------------------

<PAGE>

                                                                  STRATABASE.COM
                                                                  BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            December 31,
                                                      --------------------------
                                                         2002           2001
                                                      -----------    -----------
CURRENT ASSETS
<S>                                                   <C>            <C>
     Cash                                             $   134,093    $ 1,265,457
     Receivables:
         Trade accounts                                     3,274         21,315
         Employee and other                                20,165         12,208
         Allowance for doubtful accounts                   (3,500)        (8,500)
     Note receivable, including accrued interest                         171,206
                                                      -----------    -----------
     Inventory                                             28,450         21,363
     Refundable income taxes                                              62,844
                                                      -----------    -----------
     Prepaid expenses                                                      2,603
                                                      -----------    -----------

            Total current assets                          419,135      1,311,843

OFFICE EQUIPMENT
     Computer hardware                                     76,499         75,597
     Computer software                                     12,924         12,427
      Office furniture and equipment                       12,137         12,137

            Total office equipment                        101,560        100,161
     Less accumulated depreciation and amortization       (56,571)       (40,571)

            Office equipment, net                          44,989         59,590

OTHER ASSETS
      Deferred income taxes, net                                          45,548
                                                      -----------    -----------

      Databases and domain names, net                     518,914        629,479


            Total other assets                            518,914        675,027

TOTAL ASSETS                                          $   983,038    $ 2,046,460
                                                      ===========    ===========
</TABLE>


See accompanying notes.                                                        3
--------------------------------------------------------------------------------

<PAGE>

                                                                      STRATABASE
                                                                  BALANCE SHEETS
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                  LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                      December 31,
                                                              --------------------------
                                                                  2002           2001
                                                              -----------    -----------

CURRENT LIABILITIES
<S>                                                           <C>            <C>
      Accounts payable                                        $    59,521    $   841,944
      Accrued liabilities                                           6,934          8,916
      Income taxes payable                                           --           50,265
                                                              -----------    -----------

             Total current liabilities                             66,455        901,125
                                                              -----------    -----------



COMMITMENTS AND CONTINGENCIES (Note 8)




SHAREHOLDERS' EQUITY
      Preferred stock, $.001 par value, 1,000,000 shares
          authorized and unissued                                    --             --
      Common stock, $.001 par value, 25,000,000 shares
          authorized; 8,033,372 and 7,718,372 shares issued
          and outstanding at December 31, 2002 and 2001,
          respectively                                              8,034          7,719
      Additional paid-in capital                                2,103,371      1,515,615
      Accumulated (deficit) earnings                             (808,563)       106,082
      Related-party notes received in exchange for
          the exercise of common stock options                   (375,000)      (477,000)
      Accumulated comprehensive loss                              (11,259)        (7,081)
                                                              -----------    -----------

             Total shareholders' equity                           916,583      1,145,335
                                                              -----------    -----------

TOTAL LIABILITIES AND SHAREHOLDERS'
      EQUITY                                                  $   983,038    $ 2,046,460
                                                              ===========    ===========
</TABLE>



See accompanying notes.                                                        4
--------------------------------------------------------------------------------

<PAGE>

STRATABASE
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                      Years Ended December 31,
                                                     --------------------------
                                                        2002           2001
                                                     -----------    -----------
<S>                                                  <C>            <C>
REVENUE                                              $   430,240    $ 2,360,452
                                                     -----------    -----------

OPERATING EXPENSES
      Direct marketing                                    79,238      1,185,968
      Hardware cost of sales                              26,235        100,908
      Commissions                                        111,641         48,403
      Wages and subcontracting costs                      94,345        259,494
      Compensation expense - stock options               255,750           --
      Internet connectivity                               12,553         12,329
                                                     -----------    -----------

             Total operating expenses                    579,762      1,607,102
                                                     -----------    -----------

             Net (operating expenses) revenues          (149,522)       753,350
                                                     -----------    -----------

GENERAL AND ADMINISTRATIVE EXPENSES                      710,689        441,571

OTHER INCOME
      Interest income                                     31,195          4,809
      Gain on sale of marketable equity securities          --          154,000
                                                     -----------    -----------

             Total other income                           31,195        158,809
                                                     -----------    -----------

NET (LOSS) INCOME BEFORE INCOME TAXES                   (829,016)       470,588

PROVISION FOR INCOME TAXES                                85,629         49,342
                                                     -----------    -----------

NET INCOME (LOSS)                                       (914,645)       421,246

OTHER COMPREHENSIVE LOSS
      Foreign currency translation adjustments            (4,178)        (4,249)
                                                     -----------    -----------

COMPREHENSIVE INCOME (LOSS)                          $  (918,823)   $   416,997
                                                     ===========    ===========

BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK        $     (0.12)   $      0.06
                                                     ===========    ===========

DILUTED INCOME (LOSS) PER SHARE OF COMMON STOCK      $     (0.12)   $      0.05
                                                     ===========    ===========
</TABLE>


5
--------------------------------------------------------------------------------



<PAGE>

                                                                      STRATABASE
                                   STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                          Retained       Related-       Accumulated
                                   Common Stock             Additional    Earnings        Party           Other         Total
                               -------------------------     Paid-In    (Accumulated      Notes       Comprehensive  Shareholders'
                                  Shares        Amount       Capital       Deficit)     Receivable        Loss          Equity
                               -----------   -----------   -----------   -----------    -----------    -----------    -----------
BALANCE,
<S>                              <C>         <C>           <C>           <C>            <C>            <C>            <C>
      December 31, 2000          6,653,772   $     6,654   $   782,455   $  (315,164)   $      --      $    (2,832)   $   471,113

Exercise of Class A warrants
      (January 2001)                14,600            15        14,585          --             --             --           14,600

Exercise of common stock
      options (April 2001)       1,050,000         1,050       673,950          --             --             --          675,000

Related-party notes
received in
      exchange for common
      stock options
      exercised                       --            --            --            --         (675,000)          --         (675,000)

Payments on related-party
      notes receivable                --            --            --            --          198,000           --          198,000

U.S. income tax benefit
from common stock options
      exercised                       --            --          44,625          --             --             --           44,625

Net income and
      comprehensive
      loss                            --            --            --         421,246           --           (4,249)       416,997
                               -----------   -----------   -----------   -----------    -----------    -----------    -----------

BALANCE,
      December 31, 2001          7,718,372         7,719     1,515,615       106,082       (477,000)        (7,081)     1,145,335

Exercise of common stock
      options (April - July
                                      2002)      315,000           315       241,685           --             --          242,000

Related-party notes
received in exchange for
      common stock options
      exercised                       --            --            --            --          (14,500)          --          (14,500)

Payments on related-party
      notes receivable                --            --            --            --          116,500           --          116,500

Compensation expense related
      to common stock
      options granted                 --            --         255,750          --             --             --          255,750

U.S. income tax benefit
      from common stock
      options
      exercised                       --            --          90,321          --             --             --           90,321

Net loss and comprehensive
      loss                            --            --            --        (914,645)          --           (4,178)      (918,823)
                               -----------   -----------   -----------   -----------    -----------    -----------    -----------

BALANCE,
      December 31, 2002          8,033,372   $     8,034     2,103,371   $  (808,563)   $  (375,000)   $   (11,259)   $   916,583
                               ===========   ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>


See accompanying notes.                                                        6
--------------------------------------------------------------------------------


<PAGE>



                                                                      STRATABASE
                                                        STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                              ---------------------------
                                                                 2002            2001
                                                              -----------     -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                           <C>             <C>
      Net income (loss)                                       $  (914,645)    $   421,246
      Adjustments to reconcile net income (loss) to net
             cash from operating activities:
         Depreciation and amortization                            281,326          91,459
         Deferred income tax expense (benefit)                     45,548         (45,548)
         U.S. income tax benefit from common stock options
             options exercised                                     90,321          44,625
         Stock option compensation expense                        255,750            --
         Write-off of investment in Maturus.com, Inc.                --             2,250
         Services rendered for acquisition of databases              --           (88,473)

      Change in assets and liabilities:
         Receivables                                              (16,122)        109,026
         Income taxes receivable                                  (62,844)           --
         Prepaid expenses                                          (2,603)          3,965
         Inventory                                                 (7,087)         (8,859)
         Accounts payable                                        (782,423)        751,000
         Accrued liabilities                                       (1,982)        (12,415)
         Income taxes payable                                     (50,265)         50,265
                                                              -----------     -----------

                Net cash from operating activities             (1,165,026)      1,318,541
                                                              -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
      Advance on note receivable                                 (150,000)           --
      Acquisition of domain databases and names                  (154,761)       (466,288)
      Acquisition of office and computer equipment                 (1,399)        (14,948)
                                                              -----------     -----------

                Net cash from investing activities               (306,160)       (481,236)
                                                              -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from exercise of Class A warrants                     --            14,600
      Proceeds from exercise of common stock options              242,000            --
      Payments on related-party notes received in
         exchange for common stock                                102,000         198,000
                                                              -----------     -----------

                Net cash from financing activities                344,000         212,600
                                                              -----------     -----------
</TABLE>

See accompanying notes.                                                        7
--------------------------------------------------------------------------------


<PAGE>


STRATABASE
STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------


                                                 Years Ended December 31,
                                                ---------------------------
                                                   2002            2001
                                                -----------     -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH         $    (4,178)    $    (4,249)
                                                -----------     -----------

NET INCREASE (DECREASE) IN CASH                  (1,131,364)      1,045,656

CASH AND CASH EQUIVALENTS, beginning of year      1,265,457         219,801
                                                -----------     -----------

CASH AND CASH EQUIVALENTS, end of year          $   134,093     $ 1,265,457
                                                ===========     ===========

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

SUPPLEMENTAL DISCLOSURE OF NONCASH
         INVESTING TRANSACTIONS
      Exercise of common stock options for
         related-party notes receivable         $    14,500     $   675,000
                                                ===========     ===========




8
--------------------------------------------------------------------------------

<PAGE>


                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1 - NATURE OF ORGANIZATION AND OPERATIONS

On March 11,  2001,  Stratabase.com  changed its legal name to  Stratabase  (the
Company).   Stratabase  is  a  Nevada   corporation   which  develops   Customer
Relationship Management (CRM) software for its own use, that of its clients, and
for general distribution.  The Company provides clients with CRM, database,  and
technical services.  Its software is designed to provide sales force automation,
marketing  automation,  data  synchronization,  and knowledge worker  efficiency
services.  During  2002,  the  Company  began  redefining  its  product  line by
developing its  proprietary  software to be offered as a hosted service over the
Internet. Management believes this new proprietary software product line will be
the primary focus of the Company in 2003. The Company plans to have the software
available for sale during the second  quarter of 2003. On a limited  scale,  the
Company provided  customized  computer  hardware for its customers.  The Company
operates from Abbotsford, British Columbia, Canada.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management's  estimates  and  assumptions  - The  preparation  of the  financial
statements,  in the conformity with generally  accepted  accounting  principles,
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities  as of the date of the balance,  and revenues
and expenses for the period. Actual results could differ significantly for those
estimates.  Significant  estimations  made by management  primarily  involve the
amortization  of the  databases and domain names and the  collectibility  of the
$150,000 note receivable.

Revenue  recognition  - The Company  provided  its  open-source  CRM software to
potential  customers  through  the  Internet at no cost.  The Company  generates
revenue from CRM, database,  and technical services to its clients. The majority
of the  CRM  projects  undertaken  by  the  Company  are  prepaid  with  revenue
recognized upon delivery and when there are no further  performance  obligations
and no rights of refund exist. There was no deferred income at December 31, 2002
or 2001. The Company  recognizes  revenue on computer hardware sales at the time
of shipment,  and title passes.  The Company did not recognize any revenues from
the closed-source CRM software developed during 2002.

Cash and cash equivalents - The Company considers all highly liquid  investments
purchased with a maturity of three months or less to be cash equivalents.


                                                                               9
--------------------------------------------------------------------------------
<PAGE>


STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Receivables  - Accounts  receivable  are  recorded  when  invoices  are  issued.
Accounts   receivable   are  written  off  when  they  are   determined   to  be
uncollectible.  The  allowance for doubtful  accounts is estimated  based on the
Company's  historical  losses,  review of specific  problem  accounts,  existing
economic  conditions  in  the  industry,  and  the  financial  stability  of its
customers.  Generally,  the Company considers accounts receivable past due after
60 days. The Company does not charge interest on overdue account balances.

Concentrations of credit risk - Financial instruments, which potentially subject
the Company to credit risk,  consist of cash and accounts and notes  receivable.
At December 31, 2002 and 2001,  the maximum loss that would have  resulted  from
these credit risks totaled $106,546 and $1,175,397, respectively, for the excess
of bank  deposits  over the  amount  that would  have been  covered by U.S.  and
Canadian  deposit  insurance  and $191,145 and  $25,023,  respectively,  for the
balance of accounts  receivable in excess of the allowance for doubtful accounts
to customers  primarily  located in the United  States and western  Canada.  The
Company  has a note  receivable  from one  party in the  amount of  $150,000  at
December 31, 2002.

Inventory - Inventory is comprised  primarily of system hardware  components and
is stated at the lower of cost or market.  The Company determines cost using the
first-in, first-out (FIFO) method.

Office  equipment - Office  equipment is recorded at cost and depreciated  using
the  straight-line  method over its useful  life,  which ranges from two to five
years.  Depreciation expense charged to general and administrative  expenses was
$16,000 and $22,146 for 2002 and 2001, respectively.

Databases and domain names - Databases and domain names are being amortized over
three years and two years,  respectively.  Total  accumulated  amortization  was
$347,140 and $81,814 at December 31, 2002 and 2001,  respectively.  Amortization
expense  charged to  operations  was  $265,326  and  $69,313  for 2002 and 2001,
respectively.

Software  development costs - Software  development and implementation costs are
expensed until the Company  determines that the software will result in probable
future  economic  benefits and  management has committed to funding the project.
Thereafter, all direct external implementation costs and purchase software costs
are  capitalized  and amortized  using the  straight-line  method over remaining
estimated useful lives,  generally not exceeding five years. To date, such costs
are not  significant.  The Company only recently  began  developing  proprietary
software for sale to potential customers.

10
--------------------------------------------------------------------------------

<PAGE>
                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Advertising - Advertising costs are expensed as incurred.

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

Foreign exchange  accounting - The Company's Canadian  transactions are measured
in local  currency and then  translated  into U.S.  dollars.  All balance  sheet
accounts have been translated  using the current rate of exchange at the balance
sheet date.  Results of operations have been translated  using the average rates
prevailing  throughout the year.  Translation gains or losses resulting from the
changes  in the  exchange  rates are  accumulated  in a  separate  component  of
shareholders'  equity.  All  amounts  included  in  the  accompanying  financial
statements and footnotes are denominated in U.S. dollars.

Stock option plans - The Company applies Accounting Principles Board Opinion No.
25 (APB No. 25) and related  interpretations  in accounting for its common stock
option plans.  Accordingly,  compensation costs are recognized as the difference
between the exercise  price of each option and the market price of the Company's
stock at the date of each grant.  Compensation expense charged to operations was
$255,750  for the year ended  December  31,  2002.  No  compensation  costs were
recognized for the year ended December 31, 2001.


                                                                              11
--------------------------------------------------------------------------------

<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

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

                                                 2002            2001
                                             -----------     -----------

Net income (loss), as reported               $  (914,645)    $   421,246
Add stock-based compensation
   expense included in reported net
   income, net of related tax effects            163,680            --
Deduct total stock-based employee
   compensation expense determined
   under fair based methods for
   all awards, net of related tax effects       (219,376)       (266,187)
                                             -----------     -----------

Pro forma net income (loss)                  $  (970,341)    $   155,059
                                             ===========     ===========

Earnings (loss) per common share:
   Basic - as reported                       $     (0.12)    $      0.06
   Basic - pro forma                         $     (0.12)    $      0.02
   Diluted - as reported                     $     (0.12)    $      0.05
   Diluted - pro forma                       $     (0.12)    $      0.02

The fair value of each option  granted is  estimated  on the date of grant using
the  Black-Scholes  option-pricing  model  with the  following  assumptions  for
December 31, 2002 and 2001, respectively: (1) dividend yield of 0%, (2) expected
volatility of 148.78% and 120.82%,  (3) risk-free  rate of 3.16% and 3.74%,  and
(4) expected  life of 1.13 and 3.24 years.  The  weighted  average fair value of
options  granted  in 2002 and 2001 was $1.04 and  $0.69,  respectively.  Because
additional  stock  options are expected to be granted  each year,  the above pro
forma  disclosures  are not  representative  of pro forma  effects  on  reported
financial results for future years.

12
--------------------------------------------------------------------------------

<PAGE>

                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Earnings  (loss) per share of common stock - Basic earnings  (loss) per share of
common  stock is computed  by dividing  net income  (loss)  available  to common
shareholders by the weighted-average number of common shares outstanding for the
period.  Diluted  earnings  per  share of common  stock  reflect  the  potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised  or  converted  into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company. The basic weighted
average  number of common shares  outstanding  for the years ended  December 31,
2002  and  2001,  were  7,928,372  and  7,368,372,   respectively.  The  diluted
weighted-average  number  of  common  shares  outstanding  for the  years  ended
December  31,  2002 and 2001 were  7,928,372  and  8,112,658,  respectively.  At
December  31,  2002 and 2001,  potential  common  shares of 715,000  and 180,000
related  to  common  stock  options,   respectively,   were  excluded  from  the
computation  of diluted  earnings  per share since their  effect would have been
anti-dilutive upon exercise.

Recently  issued  accounting  standards - In December 2002, the FASB issued SFAS
No. 148, "Accounting for Stock-Based  Compensation - Transition and Disclosure -
an Amendment of FASB  Statement No. 123." This  statement  amends FASB Statement
No. 123,  "Accounting  for  Stock-Based  Compensation,"  to provide  alternative
methods of transition for a voluntary change to the fair  value-based  method of
accounting for stock-based employee  compensation.  In addition,  this statement
amends the  disclosure  requirements  of Statement No. 123 to require  prominent
disclosures in both annual and interim financial  statements about the method of
accounting for stock-based  employee  compensation  and the effect of the method
used on reported results. The Company's management intends to continue using the
intrinsic value method for stock-based  employee  compensation  arrangements and
therefore does not expect that the application provisions of this statement will
have a material impact on the Company's financial statements.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This statement addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  (EITF)  Issue  No.  94-3,   "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)."  This statement
is effective for exit or disposal  activities  that are initiated after December
31, 2002, with early application  encouraged.  The Company's management does not
expect that the  application  of the  provisions of this  statement  will have a
material impact on the Company's financial statements.


                                                                              13
--------------------------------------------------------------------------------

<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

In July 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."   SFAS  No.  143  addresses  the   accounting  and  reporting  for
obligations associated with the retirement of tangible long-lived assets and the
associated  asset  retirement  costs.  SFAS No.  143 will be  effective  for the
Company in the first quarter of 2003. The Company's  management  does not expect
that the  application  of the  provisions of this statement will have a material
impact on the Company's financial statements.

The  Company's  management  does not expect  other  recently  issued  accounting
standards,   including  SFAS  No.  147,   "Acquisistions  of  Certain  Financial
Institutions,"  SFAS No. 145,  "Recession of FASB  Statements No. 4, 44, and 64,
Amendment  of  FASB   Statement  No.  13,  and  Technical   Corrections,"   FASB
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including Indirect Guarantees of Indebtedness of Others," to have a
material impact on the Company's financial statements.

Reclassifications - Certain 2001 balances have been reclassified to conform with
the current year presentation.


NOTE 3 - ABILITY TO CONTINUE AS A GOING CONCERN

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities in the normal course of business. However, the Company experienced a
significant  reduction in their  revenues in 2002.  The Company  began  actively
developing its  proprietary  software  product line during the second quarter of
2002, and revenues declined due to the reduced resources for sales and marketing
of the Company's  existing  product line. The Company expects to begin marketing
and sales of their new product line during the second quarter of 2003.

The Company  expects the sale of their new product line to fund their  long-term
operations and can be actively  marketing their product during 2003.  Management
believes  marketing  and operating  expenses will be financed in the  short-term
through the collection of related-party  notes due in April 2003.  Subsequent to
year-end,  the Company  reduced  their labor force and closed  their  Vancouver,
British Columbia,  office in an effort to reduce their operating and general and
administrative expenses.


14
--------------------------------------------------------------------------------

<PAGE>

                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 3 - ABILITY TO CONTINUE AS A GOING CONCERN - (continued)

The Company's  ability to operate as a going concern is dependent on its ability
to regain and sustain profitable operations and to generate sufficient cash flow
from  financing and operations to meet its  obligations as they become  payable.
Although there are no assurances that management's plans to reduce  expenditures
and raise  additional  capital will be realized,  management  believes  that the
Company  will be able to  continue  operations  in the future.  Accordingly,  no
adjustment  has  been  made  to  the   accompanying   financial   statements  in
anticipation of the Company not being able to continue as a going concern.


NOTE 4 - NOTE RECEIVABLE

The Company  loaned  $150,000  to  Advanced  Cell  Technology  (ACT),  a private
biotechnology company, in exchange for a convertible promissory note receivable.
The note bears  interest at 20% per annum,  matures  April 30, 2003,  and may be
converted into stock of ACT should ACT proceed with a preferred  stock financing
prior to the maturity  date.  The Company has accrued a receivable  for interest
income,  due under the terms of the promissory note, in the amount of $21,206 at
December 31, 2002.


NOTE 5 - RELATED-PARTY TRANSACTIONS

Investment in Maturus.com,  Inc. - In 2001, Maturus.com,  Inc., a privately-held
development stage corporation,  for which the president of the Company served as
an officer, ceased operations.  The Company wrote off their investment of $2,250
in Maturus.com,  Inc. as well as the remaining  accounts  receivable  balance of
$15,354 generated from 2000 revenues.  No revenues were earned from Maturus.com,
Inc. by the Company for the years ended December 31, 2002 or 2001.

Related-party  notes received in exchange for exercise of common stock options -
The  Company  has   reclassified  all  notes  receivable  from  (and  loans  to)
related-parties if the related-party has signed a note receivable to the Company
in exchange for the exercise of common stock options.  All notes receivable from
executive officers  aggregating $375,000 are  noninterest-bearing  and are to be
paid from proceed from the sale of stock acquired  through the exercise of stock
options, but no later than April 1, 2003.


                                                                              15
--------------------------------------------------------------------------------

<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 6 - SHAREHOLDER TRANSACTIONS

Capital raising  activities - On February 7, 2000, the Company's public offering
for up to 800,000  investment  units  closed  with the  maximum  number of units
purchased.  Each unit had a public  offering price of $.50, and consisted of one
share of  common  stock  and one each of Class A, B, and C  redeemable  purchase
warrants. The warrants, Classes A, B, and C, could be exercised for one share of
common  stock at $1, $3, and $5,  respectively,  and at 6-month,  12-month,  and
18-month  periods,  respectively,  commencing  on the  date  of  the  prospectus
(November 10, 1999).  Total  proceeds from the public  offering of $400,000 were
released to the  Company by the escrow  agent  subsequent  to the closing of the
offering.

On August 31,  2000,  a letter was issued to holders of the  Company's  warrants
advising them that the expiration date of the Class A warrants would be extended
to January 7, 2001,  and Class B and C warrants would be extended to February 7,
2001.

Prior to expiration on January 7, 2001,  14,600 Class A warrants were  exercised
for  common  stock at $1 per  share.  The  remaining  Class A  warrants  expired
unexercised.

In April 2001,  pursuant to the Company's 2000 stock option plan, 750,000 common
stock options were  exercised by officers at $0.50 per share and 300,000  common
stock  options  were  exercised  by an employee at $1, all in exchange for notes
receivable.

On May 11, 2001, the Company  authorized the issuance of up to 1,000,000  shares
of  preferred  stock,  with timing and terms at the  discretion  of the Board of
Directors.

On July 4, 2001, a letter was issued to holders of Stratabase  warrants advising
them that the expiration date of the Class B and C warrants would be extended to
January 7, 2002. All the Class B and C warrants  expired  unexercised on January
7, 2002.

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


16
--------------------------------------------------------------------------------

<PAGE>

                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 7 - PROVISION FOR INCOME TAXES

The provision for income taxes consists of the following:

                                                    2002          2001
                                                  ---------     ---------

Current:
    U.S                                           $    --       $  63,261
    U.S. net operating loss carryback               (50,240)         --
    Canadian                                           --            --

                                                    (50,240)       63,261

Deferred:
    U.S                                            (216,237)       85,204
    Increase (decrease) in valuation allowance      352,105       (99,123)
                                                  ---------     ---------

                                                    135,868       (13,919)
                                                  ---------     ---------

            Provision for income taxes            $  85,629     $  49,342
                                                  =========     =========

Deferred  income tax  represents the tax effect of differences in timing between
financial  income  and  taxable  income.  The net  deferred  tax  assets  in the
accompanying balance sheets include the following components:

                                                   2002          2001
                                                 ---------     ---------

Deferred tax assets (liabilities):
   Net operating loss carryforwards              $ 264,833     $    --
   Accumulated depreciation                         (7,387)       (6,522)
   Accumulated amortization                         94,659        20,441
                                                 ---------     ---------

                                                   352,105        13,919
                                                 ---------     ---------

Additional deferred tax asset due to exercise
   of nonqualified stock options                      --          31,629
Valuation allowance                               (352,105)         --
                                                 ---------     ---------

Net deferred tax asset                           $    --       $  45,548
                                                 =========     =========

                                                                              17
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<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 7 - PROVISION FOR INCOME TAXES - (continued)

The exercise of nonqualified  stock options in 2002 resulted in the recording of
additional  paid-in capital of $90,321 and recognition of an additional  $90,321
of deferred tax assets related to a net operating loss carryforward.

The exercise of nonqualified  stock options in 2001 resulted in the recording of
additional  paid-in  capital of $44,625,  a $12,996  reduction  in income  taxes
payable and recognition of an additional  $31,629 of deferred tax assets related
to a foreign tax credit carryforward.

As of December 31, 2002,  the Company had  available  to offset  future  taxable
income,  net  operating  loss  carryforwards  of  approximately   $779,000.  The
carryforwards will begin expiring in 2018 unless utilized in earlier years.

The valuation  allowance is provided for the year ended December 31, 2002, since
it is uncertain if the Company  will be able to utilize  existing net  operating
loss carryforwards and other deferred items in future periods.

The  provision  for income  taxes from  continuing  operations  differs from the
amount of income tax  determined  by  applying  the  applicable  U.S.  statutory
federal  income  tax  rate  to  pretax  income  as a  result  of  the  following
differences:

                                    2002     2001
                                    ----     ----

Statutory federal income tax rate    (34)%     34%
Change in valuation allowance         43      (21)
Effect of graduated tax rates        --        (3)
Other                                  1      --
                                     ---      ---

                                      10%      10%
                                     ===      ===


18
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<PAGE>

                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 8 - COMMITMENTS AND CONTINGENCIES

Lease  commitments  - The Company  leases  office  space in  Vancouver,  British
Columbia,  on a  month-to-month  basis with  monthly  payments of  approximately
$1,200.  The Company leases office space in Abbotsford,  British Columbia,  with
monthly  payments of  approximately  $1,350.  The  Abbotsford  lease  expires in
February 2003. Total rent expense under the above leases was $30,429 and $32,563
for the years ended December 31, 2002 and 2001, respectively.

The Company leases a fiber optic line for a monthly fee of approximately $1,000.
The lease expires December 31, 2003. The monthly cost of leasing the fiber optic
line has been charged to Internet connectivity expense for 2002 and 2001.

Management fees - During 2001, the Company agreed to pay management fees for the
services of its president and vice president at the rates of $5,000 and $3,000 a
month,  respectively.  In June 2002, the management fees for the services of the
president and vice president were increased to $7,500 and $5,000,  respectively.
Compensation  of $122,710 and $96,000 for the years ended  December 31, 2002 and
2001,  has  been  recorded  as  management  fees in the  accompanying  financial
statements.

Legal  contingencies  - The  Company may become  involved in certain  claims and
legal  actions  arising in the ordinary  course of  business.  In the opinion of
management,  after consultation with legal counsel, there are no current matters
expected to have a material  adverse  effect on the  financial  condition of the
Company.

                                                                              19
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<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 9 - STOCK OPTION plans

In February  2000,  the Board of  Directors  adopted the  Stratabase  2000 Stock
Option  Plan (the 2000  Plan)  reserving  1,750,000  common  shares for grant to
directors and employees.

Activity under the 2000 Plan is summarized as follows:

                                                                      Weighted
                                Available          Options         Average Price
                                for Grant        Outstanding          Per Share
                                ----------       ------------         --------
Initial shares reserved,
   February 2000                 1,750,000               --           $    --
Options granted                 (1,250,000)         1,250,000         $   0.50
Options cancelled                   55,000            (55,000)        $   0.50
                                ----------       ------------         --------

BALANCE,
   December 31, 2000               555,000          1,195,000         $   0.50

Options granted                   (705,000)           705,000         $   0.99
Options cancelled                  150,000           (150,000)        $   0.50
Options exercised                     --           (1,050,000)        $   0.64
                                ----------       ------------         --------

BALANCE,
   December 31, 2001                  --              700,000         $   0.78

Options granted                   (100,000)           100,000         $   1.30
Options cancelled                  100,000           (100,000)        $   1.45
Options exercised                     --             (230,000)        $   0.50
                                ----------       ------------         --------

BALANCE,
   December 31, 2002                  --              470,000             0.88
                                ==========       ============         ========


During 2001,  the Board of Directors  adopted the  Stratabase  2002 Stock Option
Plan (the Plan)  reserving an additional  1,750,000  common shares for employees
and directors.


20
--------------------------------------------------------------------------------

<PAGE>

                                                                      STRATABASE
                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 9 - STOCK OPTION plans - (continued)

Activity under the 2002 Plan is summarized as follows:

                                                                      Weighted
                                Available          Options         Average Price
                                for Grant        Outstanding          Per Share
                                ----------       ------------         --------

Initial shares reserved,
   January 2002                  1,750,000               --           $--
Options granted                   (330,000)           330,000         $   0.80
Options exercised                     --              (85,000)        $   1.49
                                ----------       ------------         --------

BALANCE,
   December 31, 2002             1,420,000            245,000         $   0.57
                                ==========       ============         ========

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

<TABLE>
<CAPTION>
                                            Weighted-
                                             Average
                                            Remaining         Weighted-          Number           Weighted-
     Range of             Number of        Contractual         Average         of Options          Average
     Exercise              Options            Life            Exercise          Currently         Exercise
      Prices             Outstanding       (in Years)           Price          Exercisable          Price
--------------------    --------------    --------------    --------------    --------------    --------------
<S>                           <C>                  <C>      <C>                     <C>         <C>
   $0.50 - $0.60              515,000              8.65     $      0.54             503,000     $      0.54
   $1.30 - $1.45              200,000              9.29     $      1.36              57,000     $      1.40
</TABLE>


                                                                              21
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<PAGE>

STRATABASE
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 10 - SALES ACTIVITY

The Company's sales are distributed geographically as follows:

                        2002              2001
                     ----------        ----------

United States        $  392,730        $2,217,503
Canada                   37,510           142,949
                     ----------        ----------

                     $  430,240        $2,360,452
                     ==========        ==========

During 2002,  the Company had one sale for $225,000,  which was 52% of the total
revenues for 2002.

During 2001,  the Company made sales to three  separate  sales to three separate
customers  that each  accounted  for  greater  than 10% of the  Company's  total
revenues.  The revenues  generated from these three sales were $1,700,000  which
was 72% of total revenues for 2001.


NOTE 11 - subsequent event

In January 2003,  the Company filed a proposal to effect a  continuation  of the
corporation jurisdiction from the State of Nevada to Canada on Form S-4 with the
United  States   Securities  and  Exchange   Commission   (SEC).   The  proposed
continuation  would  be  accomplished  through  the  adoption  of  the  plan  of
conversion,  as  presented  in the  proposal.  If approved by  shareholders  and
completed,  the Company would change its name to  "Stratabase,  Inc.," and would
continue  to operate  under the Canada  Business  Corporations  Act and would no
longer be a Nevada  corporation.  The  Company  has never had any  employees  or
operations  in the U.S.,  and  management  believes the  continuation  to Canada
accurately  reflects  the nature of its  operations.  Management  of the Company
believes  that the  continuation  to Canada  would enable the Company to benefit
from  scientific  research  and  development  grants that are not  available  to
non-Canadian  corporations.  As of March 23, 2003, the Form S-4 was still in the
regulatory  process  and  therefore  the  proposal  has  not yet  been  formally
presented to shareholders for approval. Due to management's controlling interest
of the Company's outstanding shares, the proposed plan would be expected to pass
if presented to shareholders for a vote.

                                                                              22
--------------------------------------------------------------------------------





<PAGE>


    CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

        PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002


     I, Trevor  Newton,  Chief  Executive  Officer,  Treasurer and Secretary,
Stratabase, certify that:



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

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;

4.   The  registrant's  other  certifying  officers and I are responsible for
     establishing  and  maintaining  disclosure  controls and  procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant and
     have:

     a)   designed  such  disclosure  controls and  procedures to ensure that
          material  information  relating to the  registrant,  including  its
          consolidated  subsidiaries,  is made  known to us by others  within
          those  entities,  particularly  during  the  period  in  which  the
          periodic reports are being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date
          of this annual report (the "Evaluation Date"); and

     c)   presented  in  this  annual  report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures  based on
          our evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based
     on our most recent  evaluation,  to the  registrant's  auditors  and the
     audit  committee  of   registrant's   board  of  directors  (or  persons
     performing the equivalent functions):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the  registrant's  ability to
          record,  process,  summarize  and  report  financial  data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b)   any fraud,  whether or not material,  that  involves  management or
          other  employees  who have a significant  role in the  registrant's
          internal controls; and

6.   The registrant's other certifying  officers and I have indicated in this
     annual report whether or not there were significant  changes in internal
     controls or in other factors that could  significantly  affect  internal
     controls subsequent to the date of our most recent evaluation, including
     any  corrective  actions  with regard to  significant  deficiencies  and
     material weaknesses.

/s/ Trevor Newton                                      Dated:  March 31, 2003
-----------------------------------------------------------------------------
Trevor Newton, Executive  Officer, Treasurer and Secretary,
Chief  Executive  Officer and Chief  Financial  Officer
 (Principal Executive Officer)