U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB


(Mark One)
[ X ]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

        For the fiscal year ended December 31, 2003

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

         For the transition period from _____ to _______

                         Commission file number 0-25455

                              LEXINGTON RESOURCES, INC.
                              -------------------------
        (Exact name of small business issuer as specified in its charter)

         NEVADA                                                 88-0365453
         ------                                                 ----------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation of organization)                              Identification No.)

                             7473 West Lake Mead Road
                              Las Vegas, Nevada 89128
                    -----------------------------------------
                    (Address of Principal Executive Offices)

                                 (702) 382-5139
                                 --------------
                           (Issuer's telephone number)


                              INTERGOLD CORPORATION
                          435 Martin Street, Suite 2000
                            Blaine, Washington 98230
                    ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

                                      NONE
                                ----------------
                                (Title of class)

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

                        COMMON STOCK, PAR VALUE $0.00025
                        --------------------------------
                                (Title of class)

<PAGE>

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

     State  the  issuer's  revenues  for its more  recent  fiscal  year  (ending
December 31, 2003): $0.

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was sold, or the average bid and asked prices of such common  equity,  as
of January 31, 2004: $10,856,484.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the most practicable date:

Class                                    Outstanding as of March 29, 2004

Common Stock, $.00025 par value          14,043,552*

*After  taking  into effect the reverse  stock  split of  one-for-three  hundred
shares of common stock  effective  August 8, 2003 and the forward stock split of
three for one share of common stock effective January 26, 2004.


<PAGE>

INDEX

ITEM 1.  DESCRIPTION OF BUSINESS

ITEM 2.  DESCRIPTION OF PROPERTY

ITEM 3.  LEGAL PROCEEDINGS

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

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
           OPERATION

ITEM 7.  FINANCIAL STATEMENTS

         CONSOLIDATED BALANCE SHEET

         CONSOLIDATED STATEMENTS OF OPERATIONS AND
           COMPREHENSIVE LOSS

         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY

         CONSOLIDATED STATEMENTS OF CASH FLOWS

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
           ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 8A. CONTROLS AND PROCEDURES

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

ITEM 10. EXECUTIVE COMPENSATION

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
           AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

SIGNATURES


<PAGE>

                           FORWARD LOOKING STATEMENTS

         Statements  made in this Form 10-KSB that are not historical or current
facts  are  "forward-looking  statements"  made  pursuant  to  the  safe  harbor
provisions of Section 27A of the  Securities Act of 1933 (the "Act") and Section
21E of the  Securities  Exchange  Act of 1934.  These  statements  often  can be
identified  by the use of terms  such as  "may,"  "will,"  "expect,"  "believe,"
"anticipate,"  "estimate," "approximate" or "continue," or the negative thereof.
The Company intends that such forward-looking  statements be subject to the safe
harbors for such statements.  The Company wishes to caution readers not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date  made.  Any  forward-looking  statements  represent  management's  best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks,  uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical  results of operations and events and those presently  anticipated or
projected.  The Company  disclaims  any  obligation  subsequently  to revise any
forward-looking  statements to reflect events or circumstances after the date of
such  statement or to reflect the  occurrence of  anticipated  or  unanticipated
events.

AVAILABLE INFORMATION

         Lexington Resources,  Inc. files annual, quarterly and current reports,
proxy  statements  and  other  information  with  the  Securities  and  Exchange
Commission (the  "Commission").  You may read and copy documents  referred to in
this Annual Report on Form 20-F that have been filed with the  Commission at the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You
may obtain  information on the operation of the Public Reference Room by calling
the Commission at  1-800-SEC-0330.  You can also obtain copies of our Commission
filings by going to the Commission's website at http://www.sec.gov



<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

         Lexington Resources,  Inc. is a corporation organized under the laws of
the State of Nevada (the  "Company").  The Company  currently  trades on the OTC
Bulletin  Board under the symbol "LXRS" and on the Berlin Stock  Exchange  under
the symbol "LX1"; WKN: AOBKLP.

         The Company was  incorporated  under the laws of the State of Nevada in
1996 under the name "All Wrapped Up,  Inc.".  During 1997,  the Company filed an
amendment  to its  articles of  incorporation  changing  its name to  "Intergold
Corporation"  pursuant  to which the  Company  was  engaged in the  business  of
exploration of gold and precious  metals in the United  States.  On November 20,
2003, subsequent to the acquisition of Lexington Oil & Gas Ltd. Co., an Oklahoma
limited liability company  ("Lexington"),  the Company filed an amendment to its
articles of incorporation changing its name to "Lexington Resources, Inc."

         As of the date of this Annual Report, the Company is a natural resource
exploration  company  engaged  in the  acquisition  and  development  of oil and
natural gas properties in the United States.

RECENT DEVELOPMENTS

         On November 15, 2002, the Company's bylaws were amended to reflect that
the Company's  shares of Common Stock be transferred  only within the provisions
of "certificate  only" or "custody only." Under  "certificate  only" or "custody
only trading," the Company  implemented a share transfer system,  which requires
that any  transfers  of the  Company's  Common Stock be made only by delivery of
physical stock certificates.  Once received by the Company's transfer agent, the
certificates  of  the  selling  shareholder  are  to  be  cancelled  and  a  new
certificate  for the same number of shares would be issued in the buyer's  name.
Under  "certificate  only" or "custody only trading," no certificates are issued
in the name of Depository Trust Company (DTC),  Cede & Co. or any other nominee.
However,  subsequent  legislation and rule changes imposed by the Securities and
Exchange   Commission   prevented   companies  with  duly  authorized   majority
shareholder based consents from unilaterally imposing the certificate only based
transfer system on minority shareholder concerns.  Since the Company had not the
successful  exit of the  Company's  issue  from  DTC's  nominee  account  or the
Canadian  Depository For Securities  ("CDS") nominee account when the rules were
changed, the Company must now comply with existing securities legislation and as
a direct result,  will remain a depository eligible issuer and not a certificate
only  issuer.  As of the  date  of  this  Annual  Report,  litigation  initiated
originally to allow the Company to exit the electronic depository systems of the
DTC and the CDS has been discontinued (see Item 3. Legal Proceedings).

FARM-OUT AGREEMENT - WAGNON PROPERTY

         The  Company  holds  a 100%  working  interest  and a 75%  net  revenue
interest in approximately 590.2 gross undeveloped acreage of a gas lease located
in Pittsburg County, Oklahoma (the "Wagnon Property"). The gas lease relating to

<PAGE>

the Wagnon Property is pursuant to a farm-out  agreement between Oakhills Energy
Inc.  ("Oakhills")  and Quinton  Rental & Repair  Services,  Inc. (the "Farm-Out
Agreement").  For a complete description of the farm-out agreement, see Material
Contracts - "Farm-Out Agreement."

NEW DIRECTORS AND FORMATION OF AUDIT COMMITTEE

         To be  effective  April 30,  2004,  the Company  will appoint Mr. Steve
Jewett  and Mr.  Norman  MacKinnon  as members  of the board of  directors.  See
"Biographies  of Directors and Officers" for the  biographies of Messrs.  Jewett
and Mr.  MacKinnon.  To be  effective  April 30,  2004,  the  Company  will also
establish an audit  committee  and will approve an audit charter under which the
audit committee will operate. The Company will appoint Mr. MacKinnon as Chairman
of the Audit  Committee  and Mr.  Jewett as a  member.  See "Item 9.  Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act."

CURRENT BUSINESS OPERATIONS

         The Company is a natural  resource  exploration  company engaged in the
acquisition and development of oil and gas properties in the United States.  The
Company  expects  to weight  its  future  development  initiatives  towards  gas
production. The Company is committed to developing into a profitable independent
oil and gas producer through systematically  expanding operations by booking new
reserves  while  organizing  drilling  and  production   initiatives  on  leased
properties.

         As of the date of this Annual Report, management has acquired a section
of farm-out  acreage in Pittsburg  County,  Oklahoma with  intentions to develop
coalbed  methane gas  production.  There are no proven  reserves on the property
substantiated  by  independent  engineering  reports,  and methods to  determine
suitability  for gas production  potential  emanate from comparable well data in
the area and historic  drilling logs that identify the gas production  target in
the vicinity of the leased acreage.  The Company has successfully  completed its
first of a  planned  four to five  coalbed  methane  gas  wells  on the  subject
acreage.

         The Company is currently working to complete the acquisition of several
additional  coal bed methane  gas  prospects  that fall  within the  criteria of
providing the geological basis for the development of drilling  initiatives that
can provide near term revenue potential, fast drilling capital repatriation from
production cash flows, and undeveloped reserve potential. It is anticipated that
the Company's ongoing efforts, subject to adequate funding being available, will
continue to be focused on successfully  concluding  negotiations  for additional
tracts  of prime  acreage  in the  coal bed  methane  producing  domain,  and to
implement  additional  development  initiatives  by drilling  new wells to prove
undeveloped  reserves.  The Company plans to continue  building and increasing a
strategic base of proven reserves and production opportunities within Oklahoma's
Arkoma basis to increase cash flow and that represent growth opportunity for the
Company and its shareholders over the immediate, near, and long term.

OIL AND GAS PROPERTIES

         As of the date of this Annual  Report,  the Company has not reported or
filed any reserve estimated with any Federal agencies, and has plans to commence
limited  production from certain  properties.  The Company does not maintain any
developed  acreage.  The Company  maintains  approximately an aggregate of 590.2

<PAGE>

gross  undeveloped  acreage  pursuant to leases and/or  concessions as discussed
below. The following is a description of the Company's oil and gas properties.

         WAGNON PROPERTY

         PRODUCTIVE WELLS AND ACREAGE. The Company holds a 100% working interest
and a 75% net revenue interest in approximately  590.2 gross undeveloped acreage
of a gas lease located in Pittsburg  County,  Oklahoma (the "Wagnon  Property").
The gas  lease  relating  to the  Wagnon  Property  is  pursuant  to a  farm-out
agreement   from  Quinton  Rental  &  Repair   Services,   Inc.  (the  "Farm-Out
Agreement").

         The Wagnon  Property is located in the Hartshorne  coal zone fairway of
the  prolific  Arkoma Basin in the middle of one of the largest Coal Bed Methane
drilling programs undertaken in the State of Oklahoma. According to the Oklahoma
Geological Survey, management of the Company believes that 865 of the 2,179 Coal
Bed Methane  completions  in Oklahoma from 1988 through 2002 were located in the
Arkoma Basin  (approximately  40%). The expected Coal Bed Methane  gas-producing
zone is located in the Hartshorne coal.  Management of the Company believes that
wells  adjacent to this property have average  initial  production of between .5
and 1.0 MMCF per day, although a number of the wells are producing over 1.0 MMCF
per day.  An average of 153  horizontal  Coal Bed  Methane  wells  completed  in
Hartshorne  coal have provided  initial  production  that average 0.418 MMCF per
day.

         Coal bed methane gas  (natural  gas) occurs in  association  with coal,
which is the United  States' most abundant  fossil fuel  resource.  Conservative
estimates suggest that in the United States more than 700 trillion cubic feet of
coal bed  methane gas exists in place,  with  perhaps  100  trillion  cubic feet
economically  recoverable  with existing  technology.  Management of the Company
believes that coal bed methane gas now accounts for approximately  7.5% of total
natural gas  production in the United  States with an increasing  trend on total
domestic production. Management of the Company further believes that exploration
costs  of  coal  bed  methane  gas  are   typically   low,  and  the  wells  are
cost-effective to drill. (Source: USGS website: http://energy.usgs.gov)

         PRESENT  ACTIVITIES.  During  approximately  January 2004,  the Company
commenced drilling  operations on its first horizontal coal bed methane gas well
to a depth of  approximately  2,400 feet vertically and 2,200  horizonally  (the
"Kellster  No. 1").  The  Kellster  No. 1 coal bed methane gas well is currently
producing  approximately  300,000 to 400,000 cubic feet of gas per day. The well
is still in dewatering  stages, and production volumes can typically increase as
the producing  reservoir  strata  further  decreases in water  content  exposing
producing  reservoir  rock  surfaces  in the  well.  Pursuant  to the  terms and
provisions  of the Farm-Out  Agreement,  the Company is required to drill a well
every six  months to retain  farm-out  with a maximum  number of five  allowable
wells.  Management  of the Company  plans to scale up drilling  operations,  and
anticipates that approximately three additional wells will be drilled. As of the
date of this Annual Report, management of the Company plans to have the next two
wells drilled by the end of May 2004.  Further  geological work will be required
if the Company  desires to commence  drilling of  additional  wells beyond those
currently planned.

         The Company has contracted with one of the largest coal bed methane gas
drillers in the State of  Oklahoma.  The Company  may also  contract  with other
drilling  consultants,  geologists  and  engineers to obtain the leading edge of
horizontal drilling and coal bed methane completion for the project.

<PAGE>

         Initial well drilling funding has been arranged through equity drilling
agreements with private  investors.  During fiscal year ended December 31, 2003,
the Company entered into equity drilling agreements with three private investors
for the funding of the Kellster  No. 1 coal bed methane gas well  (collectively,
the "Funding  Agreements").  Pursuant to the terms and provisions of the Funding
Agreements,  each private investor  provided  one-third of the authorization for
expenditure  capital  estimated  at  $360,000  for the  Kellster  No. 1 coal bet
methane gas well.  As at December  31,  2003,  an  aggregate of $10,000 had been
advanced  and the  remaining  $350,000  was  recorded as a drilling  obligation.
Pursuant  to the terms and  provisions  of the Funding  Agreements,  the private
investors  were  provided  with an 80%  working  interest  and a 60% net revenue
interest in the Kellster No. 1 well, until their respective invested capital for
the Kellster No. 1 well is repaid, after which time the investors will revert to
a 20.1%  working  interest  and a 15.075% net revenue  interest.  Oakhills,  the
operator of the  Kellster No. 1 well,  will  "back-in"  to a  reversionary  6.7%
working  interest  after the  invested  capital is repaid to the  investors  and
Lexington will "back-in" to a reversionary  53.2% working interest.  Pursuant to
further terms and provisions of the Funding Agreements,  all wells to be drilled
on the Wagnon Property will carry royalty  interests  totaling 25% to landowners
and  property  interest  holders,  and a  carried  working  interest  of 5% to a
landowner  and 5% to a company  related  to Mr.  Humphreys,  a  director  of the
Company (which company also owns a non-carried working interest of 10%).

         During  February 2004, the Company  advanced the balance of $350,000 of
drilling funds and successfully  completed  drilling of the Kellster No. 1 well.
The  Company  plans to  drill an  additional  two to three  wells on the  Wagnon
Property during the second quarter of 2004.

MATERIAL AGREEMENTS

         ACQUISITION OF LEXINGTON OIL & GAS LTD. CO.

         SHARE EXCHANGE AGREEMENT.  On November 19, 2003, Intergold  Corporation
(now known as  Lexington  Resources,  Inc.),  Lexington  Oil & Gas Ltd.  Co., an
Oklahoma  limited  liability  company  ("Lexington"),  and the  shareholders  of
Lexington (the "Lexington Shareholders") entered into a share exchange agreement
(the "Agreement").  Pursuant to the terms of the Share Exchange  Agreement,  the
Company  acquired from the Lexington  Shareholders one hundred percent (100%) of
the issued and outstanding shares of common stock of Lexington.

         Pursuant to the terms of the Agreement:  (i) the Company  acquired from
the  Lexington  Shareholders  one  hundred  percent  (100%)  of the  issued  and
outstanding  shares of common stock of  Lexington;  and (ii) the Company  issued
3,000,000 (pre-Forward Stock Split) shares of its restricted Common Stock to the
Lexington  Shareholders in proportion to their respective  holdings in Lexington
(of  which as of the  date of this  Annual  Report,  Humphreys  has  transferred
750,000 (pre-Forward Stock Split) shares to Orient).

         In  accordance  with the terms of the  Agreement:  (i)  Lexington  is a
wholly-owned  subsidiary  of the Company;  (ii) the Company  changed its name to
"Lexington  Resources,  Inc." and its  trading  symbol to "LXRS";  and (iii) the
Company's sole business operations are as a natural resource exploration company
engaged in the  acquisition and development of oil and natural gas properties in
the United  States.  See "Item 4.  Submission  of Matters to a Vote of  Security
Holders" and "Item 5. Market for Common Equity and Related Stockholder Matters".

         PURCHASE AND SALE AGREEMENTS

         During  January,  2004,  the parties to the Share  Exchange  Agreement,
Orient  Exploration  Ltd.  ("Orient"),  Douglas  Humphreys  ("Humphreys"),   the
Company,  Lexington  Oil & Gas Ltd. Co.  ("Lexington"),  Paluca  Petroleum  Inc.
("Paluca")  reevaluated  the terms of the original Share Exchange  Agreement and
upon  further  negotiations  desired to modify  the terms of the Share  Exchange
Agreement:  (i) 750,000  (pre-Forward  Stock Split) shares of restricted  Common
Stock of the Company held of record by Humphreys  were  transferred to Orient in
consideration  therefore;  (ii) the Company  assigned to  Humphreys a 5% carried
working  interest in every well  drilled by the Company on the Wagnon  Property;
(iii) the Company  agreed to allow  Humphreys to participate up to an additional
5% working interest in every well drilled by the Company on the Wagnon Property;
(iv) the Company agreed to transfer to Paluca certain assets previously acquired
by the Company (which included  working  interests and net revenue  interests in
certain oil and gas leases  located on the Doc Cole  Property,  the Atwood Booch
Sand Property,  the Jeneva Property and the Sasakwa Gilcrease Sand Property,  as
previously disclosed in prior filings)

         In  order  to  reflect  the  revised  operating  situation  arrangement
resulting from  modifications to the Share Exchange  Agreement the following two
agreements were simultaneously executed:

         HUMPRHEYS/ORIENT  AGREEMENT.  On January 21, 2004, Orient and Humphreys
entered into an agreement (the  "Humphreys/Orient  Agreement").  Pursuant to the
terms and  provisions of the  Humphreys/Orient  Agreement,  Humphreys  agreed to
transfer 750,000  (pre-Forward Stock Split) shares of restricted Common Stock of
the Company held of record by Humphreys to Orient.

<PAGE>

         PALUCA AGREEMENT. On January 21, 2004, the Company,  Lexington,  Paluca
and Humprheys  entered into an agreement (the "Paluca  Agreement").  Pursuant to
the terms and provisions of the Paluca  Agreement:  (i) the Company  assigned to
Humphreys a 5% carried working  interest in every well drilled by the Company on
the Wagnon  Property;  (ii) the Company agreed to allow Humphreys to participate
up to an additional 5% working  interest in every well drilled by the Company on
the Wagnon  Property;  (iii) Humphreys agreed to waive any and all other claims,
debts or obligations owed to Humphreys by the Company or by Lexington;  and (iv)
the Company agreed to transfer to Paluca certain assets  previously  acquired by
the Company  (which  included  working  interests  and net revenue  interests in
certain oil and gas leases  located on the Doc Cole  Property,  the Atwood Booch
Sand Property,  the Jeneva Property and the Sasakwa Gilcrease Sand Property,  as
previously disclosed in prior filings).

         Therefore,  as of the date of this  Annual  Report,  management  of the
Company does not intend to proceed with the  acquisition  or  development of the
described  properties  as set out in item (iv) as disclosed in previous  filings
due to management's  analysis that the properties do not contain the appropriate
oil and gas development  elements that form part of the Company's  current focus
and criteria for corporate oil and gas development initiatives.

EMPLOYEES

         As of the date of this Annual  Report,  the Company does not employ any
persons on a full-time or on a part-time  basis. The Company's  President,  CFO,
and one of the Company's directors are primarily  responsible for all day-to-day
operations  of the  Company.  Other  services are  provided by  outsourcing  and
consultant and special  purpose  contracts.  As the need arises and funds become
available,  however,  management  may seek  employees  as  necessary in the best
interests of the Company.  The following  lists and describes  certain  services
performed for the Company by consultants.  See "Item 10. Executive Compensation"
and "Item 12. Certain Relationships and Related Transactions."

         CONSULTING AGREEMENT

         On November 10,  2003,  the Company and  International  Market Trend AG
("IMT") entered into a financial  consulting services agreement (the "Consulting
Agreement")  for a period of two years.  Pursuant to the terms and provisions of
the  Consulting  Agreement:   (i)  IMT  shall  provide  financial  and  business
development services to the Company; and (ii) the Company granted to IMT 950,000
(pre-forward Stock Split) stock options at the exercise price of $0.50 per share

         CONSULTING SERVICES AGREEMENT

         The Company and Investor  Communications  International,  Inc.  ("ICI")
entered into a two-year  consulting  services  and  management  agreement  dated
January 1, 1999 (the "Consulting  Services  Agreement"),  whereby ICI performs a
wide  range of  management,  administrative,  financial,  marketing  and  public
company services including, but not limited to, the following: (i) international
business relations and strategy  development,  (ii) shareholder  liaison,  (iii)
corporate public relations,  press release and public information  distribution,
(iv) property exploration management,  including administration of metallurgical
development,  metallurgical  liaison, BLM liaison,  engineering company liaison,
drilling  administration,  geologist  liaison,  mapping,  survey and  catalogue,
geostatistical liaison,  environmental research,  geological reports compilation
and due  diligence  efforts,  (v)  administration,  including  auditor and legal
liaison,  media liaison,  corporate  minutebook  maintenance and record keeping,
corporate  secretarial  services,  printing and  production,  office and general
duties, and (vi) financial and business planning services, including capital and
operating  budgeting,  banking,  bookkeeping,  documentation,  database records,

<PAGE>

preparation of financial  statements and creation of annual reports.  On January
1, 2001,  the Company and ICI renewed the Consulting  Services  Agreement for an
additional two-year period.  Subsequent to January 1, 2003 and as of the date of
this Annual Report,  the Consulting  Services  Agreement has been  terminated by
mutual agreement.

COMPETITION

         The Company operates in a highly competitive industry. It competes with
major oil  companies,  independent  producers and  institutional  and individual
investors,  which are actively  seeking oil and gas  properties  throughout  the
world  together  with the  equipment,  labor and  materials  required to operate
properties.  Competition  for the  acquisition  of oil and gas wells is intense.
Many of the Company's  competitors  have financial and  technological  resources
vastly exceeding those available to the Company. Many oil and gas properties and
or leases or concessions are available in a competitive bidding process in which
the Company may lack technological  information or expertise  available to other
bidders.  Therefore,  the  Company  may  not  be  successful  in  acquiring  and
developing profitable  properties in the face of this competition.  No assurance
can be given  that a  sufficient  number of  suitable  oil and gas wells will be
available for acquisition and development.

         In  addition,  the  oil and  gas  business  is  subject  to  government
regulation under which,  among other things,  rates of production from producing
oil and gas wells may be fixed and the prices for gas  produced  from such wells
may be limited.  Moreover,  increases in the amount of oil imported from foreign
countries may occur.  Governmental regulations relating to environmental matters
could also require the Company to cease operations in certain areas.

GOVERNMENT REGULATION

         Federal,  state and local authorities  extensively regulate the oil and
gas industry.  The overall  regulatory burden on the industry increases the cost
of doing  business and, in turn,  decreases  profitability.  Regulations  affect
various aspects of oil and gas drilling and production activities, including the
pricing and marketing of oil and gas production,  the drilling of wells (through
permit and  bonding  requirements),  the  positioning  of wells,  the sharing of
markets, production limitations, plugging and abandonment and restoration. These
laws and regulations are under constant review for amendment or expansion.

         The  Company's  business  operations  are also  subject to complex  and
constantly changing environmental laws and regulations adopted by federal, state
and  local  governmental  authorities.  The  Company  could be  forced to expend
significant  resources  to comply  with new laws or  regulations  or  changes to
current  requirements.  Federal,  state and local  environmental  agencies  have
relatively little experience with the regulation of coal bed methane operations,
which are  technologically  different from  conventional oil and gas operations.
This  inexperience  has created  uncertainty  regarding how these  agencies will
interpret air, water and waste  requirements  and other  regulations to coal bed
methane drilling,  fracture stimulation  methods,  production and water disposal
operations.  The  Company  may be subject  to  uncertainty  associated  with new
regulatory  interpretations  and inconsistent  interpretations  between federal,
state and local agencies.


<PAGE>

RISK FACTORS

         The  shares of the  Company  are  highly  speculative  and  involve  an
extremely high degree of risk.  Shareholders  of the Company should consider the
following risk factors.

         OIL AND GAS PRICES ARE VOLATILE

         Management  of the Company  expects  that  markets for oil and gas will
continue to be volatile. Any substantial or extended decline in the price of oil
or gas would negatively affect the financial  condition and results of operation
of  the  Company.   The  Company's   potential   revenues,   operating  results,
profitability,  and future rate of growth depend  heavily on  prevailing  market
prices for oil and gas. A material  decline could reduce potential cash flow and
borrowing capacity, as well as the value and amount of reserves. Various factors
beyond the Company's  control can affect prices of oil and gas.  These  external
factors and the  volatile  nature of the energy  markets  make it  difficult  to
estimate future commodity prices.

         INADEQUATE CAPITAL TO FINANCE OPERATIONS

         If the  Company  is unable to  realize  revenues  and could not  obtain
capital through  financings or otherwise,  the Company's  ability to execute its
development  plans and  achieve  production  levels  could be  greatly  limited.
Current  development plans require the Company to make capital  expenditures for
the  exploration  and  development  of  the  oil  and  natural  gas  properties.
Historically,  the  Company  has  funded its  business  operations  through  the
issuance of equity and short-term financing  arrangements.  Additional financing
may not be available to the Company on acceptable  terms.  Future cash flows and
the  availability  of  financing  will be  subject  to a  number  of  variables,
including  potential  production and the prices of oil and natural gas.  Issuing
equity  securities to satisfy the Company's  financing  requirements  could case
substantial dilution to existing shareholders. In addition, debt financing could
lead to a  diversion  of cash flow to satisfy  debt  servicing  obligations  and
create restrictions on business operations.

         ESTIMATES OF OIL AND GAS RESERVES ARE NOT PRECISE

         The Company's  future  reports may contain  estimates of proved oil and
gas reserves and the estimated  future net revenues from such  reserves.  Actual
results will likely vary from amounts  estimated,  and any significant  variance
could  have a  material  adverse  effect  on the  Company's  future  results  of
operation.

         Reserve  estimates  are  based  upon  various  assumptions,   including
assumptions  required  by the  Securities  and  Exchange  Commission  rules  and
regulations  relating to oil and gas prices,  drilling and  operating  expenses,
capital expenditures, taxes and availability of funds. The process of estimating
reserves is complex. This process requires significant decisions and assumptions
in the evaluation of available geological, geophysical, engineering and economic
data for each reservoir.  Therefore,  these estimates are not precise.  However,
the  likelihood of recovery of these reserves is  considerably  more likely than
not.

         Actual  future  production,   oil  and  gas  prices,  revenues,  taxed,
development  expenditures,  operating expenses and quantities of recoverable oil
and gas reserves  will most likely vary from those  estimates.  Any  significant
variance could materially  affect the estimated  quantities and present value of
such reserves as disclosed by the Company.  In addition,  the Company may adjust

<PAGE>

estimates  of  proved  reserves  to  reflect  production  history,   results  of
exploration  and  development,  prevailing oil and gas prices and other factors,
many of which are beyond the Company's control.

         GEOGRAPHICAL AND REGIONAL RISKS

         As a result of the  Company's  recent  acquisition  of  Lexington,  the
Company's working interests are primarily located in the State of Oklahoma.  The
prices to be received by the Company for the natural gas  production  from these
properties will be determined mainly by factors affecting the regional supply of
and demand for natural gas. Based on studies,  regional  differences could cause
published indices used generally to establish the price received for natural gas
production  in the  United  States  to be  higher  than the  market  price to be
received by the Company for natural gas produced  from its  properties.  Reduced
regional seasonal demand and inadequate pipeline transportation capacity linking
the Company's production in this area to consuming regions are principal factors
contributing to these price  differentials.  Continued volatility is expected to
affect the future  price to be  received  for natural  gas  produced  from these
properties.

         ACQUISITION ACTIVITIES MAY NOT BE SUCCESSFUL

         As part of the Company's growth strategy,  additional  acquisitions may
be made of  properties.  Such  acquisitions  may pose  substantial  risks to the
Company's business,  financial condition and results of operations.  In pursuing
acquisitions,  the Company  competes  with other  companies,  many of which have
greater financial and other resources to acquire attractive properties.  Even if
future  acquisitions  are  completed,  the following are some of the  associated
risks:  (i) some of the  properties  may not  produce  revenues  at  anticipated
levels;  (ii)  the  Company  may not be able to  integrate  acquired  properties
successfully  which  could  result  in  substantial  costs  and  delays or other
operational,  technical or financial problems;  (iii) acquisitions could disrupt
ongoing business operations,  divert resources and make it difficult to maintain
current  business  standards and  procedures;  (iv) future  acquisitions  may be
financed by issuing  common stock for some or all of the  expenses,  which could
dilute the ownership interests of the Company's shareholders; and (v) additional
debt may be incurred related to future acquisitions.

         COMPETITION

         The Company operates in a highly competitive industry. It competes with
major oil  companies,  independent  producers and  institutional  and individual
investors,  which are actively  seeking oil and gas  properties  throughout  the
world  along  with the  equipment,  labor  and  materials  required  to  operate
properties.  Many of the Company's  competitors have financial and technological
resources  vastly  exceeding  those  available to the Company.  Many oil and gas
properties and or leases or concessions  are available in a competitive  bidding
process in which the Company may lack  technological  information  or  expertise
available to other  bidders.  Therefore,  the Company may not be  successful  in
acquiring and developing profitable properties in the face of this competition.

         FINANCIAL RISKS OF OIL AND GAS EXPLORATION

         The business of exploring for and  developing oil and gas properties is
an  activity  that  involves  a high  degree of  business  and  financial  risk.
Exploration and development decisions generally are based on various assumptions
and  subjective  judgments  that are  speculative.  It is  impossible to predict

<PAGE>

accurately the ultimate production  potential,  if any, of a particular property
or well.  Moreover,  the  successful  completion  of an oil or gas well does not
ensure a profit on  investment.  A  variety  of  factors,  both  geological  and
market-related, can cause a well to become uneconomic or marginally economic.

         OPERATING RISKS AND ENVIRONMENTAL HAZARDS

         The oil and natural gas  business  involves  operating  hazards such as
well blowouts, craterings, explosions,  uncontrollable flows of oil, natural gas
or well fluids, fires, formations with abnormal pressures,  pipeline ruptures or
spills,  pollution,  releases of toxic gas and other  environmental  hazards and
risks, any of which could cause the Company a substantial loss.

         EXPLORATORY AND DEVELOPMENT DRILLING ACTIVITIES MAY NOT BE SUCCESSFUL

         The Company's future drilling activities may not be successful, and our
management  cannot be sure that the Company's  overall  drilling success rate or
drilling success rate for activity within a particular area will not decline. In
addition,  the wells that the  Company may not recover all or any portion of the
Company's  capital  investment in the wells or the  underlying  leaseholds.  The
Company is currently in the early stages of various exploration projects and can
offer  no  assurance  that  the  development  of these  projects  will  occur as
scheduled  or  that  actual  results  will be in line  with  initial  estimates.
Unsuccessful  drilling  activities could negatively affect the Company's results
of operations  and financial  condition.  The cost of drilling,  completing  and
operating wells is often uncertain, and a number of factors can delay or prevent
drilling operations including: (i) unexpected drilling conditions; (ii) pressure
or  irregularities  in formation;  (iii) equipment  failures or accidents;  (iv)
adverse  weather  conditions;  and (iv) shortages or delays in  availability  of
drilling  rigs and delivery of  equipment.  In addition,  the Company may not be
able to obtain any lease rights in potential drilling locations that the Company
identifies. There is no guarantee that the potential drilling locations that the
Company has or will identify will ever produce natural gas or oil.

         FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS

         Federal,  state and local authorities  extensively regulate the oil and
gas industry.  The overall  regulatory burden on the industry increases the cost
of doing  business and, in turn,  decreases  profitability.  Regulations  affect
various aspects of oil and gas drilling and production activities, including the
pricing and marketing of oil and gas production,  the drilling of wells (through
permit and  bonding  requirements),  the  positioning  of wells,  the sharing of
markets, production limitations, plugging and abandonment and restoration. These
laws and regulations are under constant review for amendment or expansion.

         The  Company's  business  operations  are also  subject to complex  and
constantly changing environmental laws and regulations adopted by federal, state
and  local  governmental  authorities.  The  Company  could be  forced to expend
significant  resources  to comply  with new laws or  regulations  or  changes to
current  requirements.  Federal,  state and local  environmental  agencies  have
relatively little experience with the regulation of coal bed methane operations,
which are  technologically  different from  conventional oil and gas operations.
This  inexperience  has created  uncertainty  regarding how these  agencies will
interpret air, water and waste  requirements  and other  regulations to coal bed
methane drilling,  fracture stimulation  methods,  production and water disposal
operations.  The  Company  may be subject  to  uncertainty  associated  with new

<PAGE>

regulatory  interpretations  and inconsistent  interpretations  between federal,
state and local agencies.

         DEPENDENCE ON TRANSPORTATION FACILITIES OWNED BY OTHERS

         The  marketability  of the Company's gas production  depends in part on
the  availability,  proximity  and capacity of pipeline  systems  owned by third
parties, and changes in contractual  arrangements with these third parties could
materially  affect the  Company's  operations.  In  addition,  federal and state
regulation  of gas  and  oil  production  and  transportation,  tax  and  energy
policies, changes in supply and demand, pipeline pressures, and general economic
conditions could adversely affect the Company's ability to transport its natural
gas. Moreover, gas transportation  contract may require the Company to transport
minimum volumes of natural gas. If the Company should ship smaller volumes,  the
Company may be liable for the shortfall. Unforeseen events, including production
problems or substantial  decreases in the price or demand for natural gas, could
cause the Company to ship less than the required volumes, resulting in losses on
these contracts.

         DEPENDENCE ON KEY PERSONNEL

         The  Company's  success  depends  on  the  continued  services  of  its
executive officers and directors.  The Company's key personnel include Mr. Grant
Atkins, the President and a director of the Company,  and Mr. Douglas Humphreys,
a director.  Loss of the  services of these  people  could  result in  financial
losses and interruptions in operations.


ITEM 2. PROPERTIES

         The Company is a natural  resource  exploration  company engaged in the
acquisition  and  development  of oil and natural gas  properties  as  described
above.  Except as described  above  regarding  the oil and gas  properties,  the
Company  does not own any other real estate or  properties.  The Company  leases
office space and its offices are located at 7473 West Lake Mead Road, Las Vegas,
Nevada 89128. Its telephone number is 702-382-5139  (toll free 888-848-7377) and
its fax number is 702-385-1202.


ITEM 3. LEGAL PROCEEDINGS

         In 2003, the Company filed a complaint in the Second  Judicial Court of
the State of Nevada in and for the Count of Washoe  (the  "Court")  against  the
Depository Trust  Corporation,  a foreign banking trust  corporation  ("DTC") to
cause  DTC to  exit  the  Company's  issue  from  its  electronic  clearing  and
settlement  system.  On or about  June 4,  2003,  the  Securities  and  Exchange
Commission  ("SEC")  approved  legislation  and  rule  changes  imposed  by  the
Securities and Exchange  Commission  preventing  companies with duly  authorized
majority  shareholder based consents from unilaterally  imposing the certificate
only based transfer system applied for by the issuer on all of its shareholders,
ruling in essence that certification is up to individual shareholders. Since the
Company had not completed the successful  exit of the Company's issue from DTC's
nominee  account or the  Canadian  Depository  For  Securities  ("CDS")  nominee
account  when the rules were  changed,  the  Company  must  comply  with the new
securities  legislation,  and as a  direct  result,  will  remain  a  depository
eligible  issuer and not a  certificate  only issuer.  As of March 9, 2004,  the
Company has filed a notice of voluntary dismissal with the Court, and thus

<PAGE>

litigation  initiated  originally  to allow the  Company to exit the  electronic
depository systems before the rules were changed has been discontinued.

         Except as disclosed  above,  management is not aware of any other legal
proceedings  contemplated  by any  governmental  authority  or any  other  party
involving the Company or its  properties.  As of the date of this Annual Report,
no director,  officer or affiliate of the Company is (i) a party  adverse to the
Company in any legal proceeding,  or (ii) has an adverse interest to the Company
in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against the Company or its properties.


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

NOVEMBER 19, 2003 WRITTEN CONSENT

         On September 5, 2003, the Board of Directors  approved the execution of
the Agreement and certain other corporate action,  including an amendment to the
Company's  Articles of  Incorporation to effect a proposed change in the name of
the  Company to either  "Lexington  Resources,  Inc." in the event the  proposed
transaction with Lexington was  consummated,  or to such other resulting name as
the Board of Directors  deemed  appropriate to reflect  proposed future business
operations.

         The Board of Directors  further  authorized and directed the submission
of an Information Statement pursuant to Section 14(c) of the Securities Exchange
Act  of  1934,  as  amended  (the  "Information  Statement").   The  preliminary
Information  Statement was filed with the Securities and Exchange  Commission on
September  29,  2003  and the  definitive  Information  Statement  was  filed on
November 3, 2003. The Information  Statement was circulated to the  shareholders
of the  Company in  connection  with the taking of  corporate  action  without a
meeting  upon the written  consent of ten (10) or less  shareholders  holding of
record a majority of the outstanding  shares of the Company's  common stock (the
"November 19, 2003 Written  Consent").  As of September  30, 2003,  (the "Record
Date"),  there were  521,184  shares of the  Company's  Common  Stock issued and
outstanding.  The names of the  shareholders  who signed the  November  19, 2003
Written Consent and their  respective  equity ownership of the Company as of the
Record Date were as follows:  (i)  Alexander Cox holding of record 76,378 shares
of common stock (14.7%);  (ii) Intergold  Mining  Corporation  holding of record
58,081  shares  of  common  stock   (11.1%);   (iii)   Investor   Communications
International Inc. holding of record 23,308 shares of common stock (4.5%);  (iv)
Newport  Capital  Corp.  holding of record 13,594 shares of common stock (2.6%);
and (v) TriStar  Financial  Services Inc.  holding of record  106,527  shares of
common stock (20.44%).

         The matters  upon which  action was taken  effective  November 19, 2003
pursuant to the November 19, 2003  Written  Consent  included the approval of an
amendment to the Company's  Articles of  Incorporation  to effectuate a proposed
change in the name of the Company to  "Lexington  Resources,  Inc." in the event
the proposed  transaction with Lexington Oil & Gas Ltd. was  consummated,  or to
such other name as may be approved by the Board of Directors of the Company,  in
its sole and absolute discretion, to reflect proposed future business operation.

AUGUST 7, 2003 WRITTEN CONSENT

         On June 1, 2003,  the Board of  Directors  authorized  and directed the
submission  of an  Information  Statement  pursuant  to  Section  14(c)  of  the

<PAGE>

Securities  Exchange  Act of  1934,  as  amended  (the  "July  2003  Information
Statement").

         The July 2003 Information  Statement was circulated to the shareholders
of the  Company in  connection  with the taking of  corporate  action  without a
meeting  upon the written  consent of ten (10) or less  shareholders  holding of
record a majority of the outstanding  shares of the Company's  Common Stock (the
"August 7, 2003 Written  Consent").  As of June 10, 2003,  (the "Record  Date"),
there  were  156,128,943  shares  of  the  Company's  Common  Stock  issued  and
outstanding  (pre-Reverse Stock Split). The names of the shareholders who signed
the August 7, 2003 Written Consent and their respective  equity ownership of the
Company  as of the Record  Date were as  follows:  (i)  Sonanini  Holdings  Ltd.
holding of record  34,226,513  shares of common  stock  (21.89%);  (ii)  TriStar
Financial  Services  Inc.  holding of record  31,957,630  shares of common stock
(20.44%);  and (iii)  Alexander  W. Cox holding of record  22,912,400  shares of
common stock (14.66%).

         The matters upon which action was taken  pursuant to the August 7, 2003
Written  Consent  included the: (i)  authorization  of the Board of Directors to
effect a reverse  stock  split of  one-for-three  hundred  (the  "Reverse  Stock
Split") of the Company's  issued and  outstanding  shares of common stock;  (ii)
approval of the sale of the  Company's  subsidiary  pursuant to future  possible
restructuring initiatives, which included approval and authorization of any sale
and  purchase  agreement  relating  thereto  (the  "Sale and  Purchase");  (iii)
approval  of the  election  of Grant R.  Atkins  to serve as a  director  of the
Company until the next annual meeting of the shareholders or until his successor
has been  elected and  qualified;  (iv)  approval of a stock option plan for key
personnel of the Company (the "Stock Option Plan");  and (v) ratification of the
selection of LaBonte & Co. as the Company's  independent  public accountants for
the fiscal year ending December 31, 2003.


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         Lexington Resources,  Inc.'s Common Stock is traded on the OTC Bulletin
Board under the symbol  "LXRS".  The market for the  Company's  Common  Stock is
limited,  volatile and sporadic. The following table sets forth the high and low
sales  prices  relating to the  Company's  Common  Stock for the last two fiscal
years.  These  quotations  reflect  inter-dealer  prices without retail mark-up,
mark-down, or commissions, and may not reflect actual transactions.

                                      FISCAL YEARS ENDED
                  ------------------------------------------------------------
                  DECEMBER 31, 2003                  DECEMBER 31, 2002
                  ------------------------------------------------------------
                  HIGH BID          LOW BID          HIGH BID         LOW BID
                  ------------------------------------------------------------

First Quarter     $0.030            $0.010             $0.010           $0.010
Second Quarter    $0.030            $0.010             $0.049           $0.005
Third Quarter     $2.00             $2.00              $0.035           $0.012
Fourth Quarter    $4.250            $3.033             $0.025           $0.005

<PAGE>

HOLDERS

         As of March 29, 2004, the Company had approximately 117 shareholders of
record.

DIVIDENDS

         No dividends  have ever been  declared by the Board of Directors of the
Company on its Common Stock.  Holders of shares of Series A Preferred  stock and
Series B Preferred stock were entitled to receive,  when, as, and if declared by
the Board of Directors of the Company out of funds at the time legally available
therefore, cash or stock dividends at an annual rate of 20%, payable annually in
arrears, commencing January 1, 1999.

         On March 13, 2003, the holders of 6,200,000  Series A Preferred  shares
of stock  elected  to  convert  their  shares  to  Common  Stock.  As a  result,
cumulative  dividends  totaling  $1,371,475  became  payable on March 15,  2003.
Accordingly,  the Company  issued  38,953  (post-Reverse  Stock Split) shares of
Common  Stock in  exchange  for the  6,200,000  Series  A  Preferred  Stock  and
settlement of the dividend  liability of $1,371,475 in accordance with the terms
of the Series A Preferred Stock.

         On March 13, 2003, the holders of 2,510,000  Series B Preferred  shares
of stock  elected  to  convert  their  shares  to  Common  Stock.  As a  result,
cumulative  dividends  totaling  $995,550  became  payable  on March  15,  2003.
Accordingly,  the Company  issued  15,004  (post-Reverse  Stock Split) shares of
Common  Stock in  exchange  for the  2,510,000  Series  B  Preferred  Stock  and
settlement of the dividend liability of $995,550 in accordance with the terms of
the Series B Preferred Stock.

         The Company's  losses do not currently  indicate the ability to pay any
cash  dividends,  and the Company does not indicate the intention of paying cash
dividends  either on its  Common  Stock or  preferred  stock in the  foreseeable
future.

REVERSE STOCK SPLIT

         The Board of Directors of the Company and the shareholders  pursuant to
the August 7, 2003 Written Consent authorized and approved a reverse stock split
of  one-for-three  hundred of the  Company's  issued and  outstanding  shares of
Common Stock (the "Reverse Stock Split").

         The Reverse Stock Split was effectuated  based on market conditions and
upon a determination  by the Board of Directors that the Reverse Stock Split was
in the best  interests  of the  Company  and the  shareholders.  In the  Board's
judgment the Reverse Stock Split would result in the greatest  marketability  of
the Common Stock based upon prevailing  market  conditions and the likely effect
on the market price of the Common Stock and other relevant  factors.  The intent
of the Reverse  Stock Split was to increase the  marketability  of the Company's
Common Stock.

         The Reverse Stock Split was  effectuated  on August 8, 2003 upon filing
the appropriate  documentation  with NASDAQ. The Reverse Stock Split reduced the
Company's  issued and  outstanding  shares of Common Stock from  156,328,943  to
approximately  521,184 shares of Common Stock. The Common Stock will continue to
be $0.00025 par value.

FORWARD STOCK SPLIT

         On January 14, 2004, the Board of Directors of the Company  pursuant to
minutes of written consent in lieu of a special meeting  authorized and approved
a forward stock split of  three-for-one  of the Company's issued and outstanding
shares of Common Stock (the "Forward Stock Split").

         The Forward Stock Split was effectuated  based on market conditions and
upon a determination  by the Board of Directors that the Forward Stock Split was
in the best  interests  of the  Company  and the  shareholders.  In the  Board's
judgment the Forward  Stock Split would  result in an increase in the  Company's
trading  float of  shares  of  Common  Stock  available  for sale  resulting  in
facilitation of investor  liquidity and trading volume potential.  The intent of
the Forward  Stock  Split was to increase  the  marketability  of the  Company's
Common Stock.

<PAGE>

         The Forward Stock Split was  effectuated  with a record date of January
26, 2004 upon filing the  appropriate  documentation  with  NASDAQ.  The Forward
Stock Split  increased the  Company's  issued and  outstanding  shares of Common
Stock from 4,281,184 to  approximately  12,843,552  shares of Common Stock.  The
Common Stock will continue to be $0.00025 par value.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

STOCK OPTION PLAN

         On August 7, 2003,  the Board of Directors  of the Company  unanimously
approved and adopted a stock option plan (the "Stock Option Plan").  The purpose
of the Stock  Option  Plan is to advance  the  interests  of the Company and its
shareholders  by  affording  key  personnel  of the Company an  opportunity  for
investment  in the  Company  and the  incentive  advantages  inherent  in  stock
ownership in the Company.  Pursuant to the  provisions of the Stock Option Plan,
stock options (the "Stock Options") will be granted only to key personnel of the
Company, generally defined as a person designated by the Board of Directors upon
whose  judgment,  initiative  and efforts the  Company  may rely  including  any
director, officer, employee or consultant of the Company.

         The Stock Option Plan is to be  administered  by the Board of Directors
of the  Company,  which  shall  determine  (i) the  persons to be granted  Stock
Options under the Stock Option Plan;  (ii) the number of shares  subject to each
option,  the exercise  price of each Stock  Option;  and (iii) whether the Stock
Option  shall be  exercisable  at any time during the option  period of ten (10)
years or whether the Stock Option shall be  exercisable  in  installments  or by
vesting  only.  The Stock  Option Plan  provides  authorization  to the Board of
Directors to grant Stock  Options to purchase a total number of shares of Common
Stock of the Company,  not to exceed 1,000,000 shares as at the date of adoption
by the Board of Directors  of the Stock Option Plan.  At the time a Stock Option
is granted  under the Stock  Option  Plan the Board of  Directors  shall fix and
determine the exercise  price at which shares of Common Stock of the Company may
be acquired;  provided,  however, that any such exercise price shall not be less
than  that  permitted  under the rules and  policies  of any stock  exchange  or
over-the-counter market which is applicable to the Company.

         In the event an  optionee  who is a director  or officer of the Company
ceases  to  serve in that  position,  any  Stock  Option  held by such  optionee
generally  may be  exercisable  within up to ninety (90) calendar days after the
effective  date that his  position  ceases,  and after  such  90-day  period any
unexercised  Stock  Option  shall  expire.  In the event an  optionee  who is an
employee or consultant of the Company ceases to be employed by the Company,  any
Stock Option held by such  optionee  generally may be  exercisable  within up to
sixty (60)  calendar days (or up to thirty (30) calendar days where the optionee
provided only investor  relations  services to the Company)  after the effective
date that his  employment  ceases,  and  after  such 60- or  30-day  period  any
unexercised Stock Option shall expire.

         No  Stock  Options   granted  under  the  Stock  Option  Plan  will  be
transferable by the optionee,  and each Stock Option will be exercisable  during
the lifetime of the optionee  subject to the option  period of ten (10) years or
limitations described above. Any Stock Option held by an optionee at the time of
his death may be  exercised  by his  estate  within one (1) year of his death or
such longer period as the Board of Directors may determine.

<PAGE>

         The  Board  of  Directors   shall  determine  the  acceptable  form  of
consideration  for  exercising a Stock Option,  including the method of payment.
Such  consideration  may  consist  entirely  of : (i) cash;  (ii)  check,  (iii)
promissory note; (iv) other shares which (A) in the case of shares acquired upon
exercise of a Stock  Option,  have been owned by the  optionee for more than six
months on the date of surrender, and (B) have a fair market value on the date of
surrender  equal to the aggregate  exercise price of the shares as to which said
Stock Option shall be exercised; (v) consideration received by the Company under
a cashless  exercise  program  implemented by the Company in connection with the
Stock  Option Plan;  (vi) a reduction in the amount of any Company  liability to
the  optionee;  (vii) such  other  consideration  and method of payment  for the
issuance of shares to the extent  permitted by  applicable  laws;  or (viii) any
combination of the foregoing methods of payment.

         Notwithstanding the foregoing, any method of payment other than in case
may be used only with the  consent  of the Board of  Directors  or if and to the
extent so provided in an agreement.

         INCENTIVE STOCK OPTIONS

         The Stock Option Plan further provides that,  subject to the provisions
of the Stock Option Plan and prior shareholder approval,  the Board of Directors
may grant to any key  personnel  of the Company  who is an employee  eligible to
receive  options one or more  incentive  stock options to purchase the number of
shares of common stock allotted by the Board of Directors (the "Incentive  Stock
Options").

         The option term of each  Incentive  Stock Option shall be determined by
the Board of  Directors,  which shall not commence  sooner than from the date of
grant and shall terminate no later than ten (10) years from the date of grant of
the Incentive Stock Option,  subject to possible early  termination as described
above.

         AMENDMENTS TO STOCK OPTION PLAN AND REGISTRATION STATEMENTS FILED

         Pursuant  to the terms and  provisions  of the  Agreement,  the Company
caused to be filed with the Securities  and Exchange  Commission on November 21,
2003  a  registration  statement  on  "Form  S-8 - For  Registration  Under  the
Securities  Act of 1933 of  Securities  to Be Offered to  Employees  Pursuant to
Employee  Benefit  Plans".  The  S-8  registration  statement  became  effective
registering Stock Options under the Stock Option Plan in the amount of 1,000,000
shares at $0.50 per share.

         On November 19, 2003,  the Board of Directors of the Company  ratified,
approved  and  confirmed  the adoption of  amendments  to the Stock Option Plan,
which provided  authorization to the Board of Directors to grant up to 1,000,000
Stock Options to directors,  officers,  employees and consultants of the Company
and its  subsidiaries.  Options  granted under the stock Option Plan shall be at
prices and for terms as determined  by the Board of Directors  with terms not to
exceed ten (10) years.

         On December 31, 2003,  the Board of Directors of the Company  ratified,
approved  and  confirmed  the adoption of  amendments  to the Stock Option Plan,
which provided  authorization to the Board of Directors to grant up to 4,000,000
Stock Options to directors,  officers,  employees and consultants of the Company
and its  subsidiaries.  Options  granted under the Stock Option Plan shall be at
prices and for terms as determined  by the Board of Directors  with terms not to
exceed ten (10) years.

         As of the date of this Annual Report,  the Company  intends to cause to
be filed with the  Securities  and  Exchange  Commission  a second  registration
statement on "Form S-8 - For  Registration  Under the  Securities Act of 1933 of
Securities to Be Offered to Employees Pursuant to Employee Benefit Plans". It is
anticipated   that  the  S-8   registration   statement  will  become  effective
registering Stock Options under the Stock Option Plan in the aggregate amount of
1,000,000 shares as follows: (i) 500,000 shares exercisable at an exercise price
of $1.00 per share; and (ii) 500,000 shares  exercisable at an exercise price of
$3.00 per share.

         STOCK OPTIONS GRANTED

         In accordance  with the terms and  provisions of the Stock Option Plan,
and as of the date of this Annual Report,  the Board of Directors of the Company
has granted an aggregate of 2,000,000 Stock Options as follows  (4,000,000 Stock
Options  post-Forward Stock Split): (i) 50,000 Stock Options  (pre-Forward Stock
Split) exercisable at $0.50 per share to Douglas Humphreys expiring February 12,
2013; (ii) 950,000 Stock Options  (pre-Forward Stock Split) exercisable at $0.50
per share to IMT and/or IMT's employees or consultants  who, in such capacities,

<PAGE>

rendered bona fide services on behalf of the Company (which all such shares were
subject  to the S-8  registration  statement  as filed with the  Securities  and
Exchange  Commission);  (iii) 500,000 Stock  Options  (post-Forwrd  Stock Split)
exercisable at $1.00 per share to IMT and two directors;  and (iv) 500,000 Stock
Options (post-Forward Stock Split) exercisable at $3.00 per share to IMT and one
director.

         STOCK OPTIONS EXERCISED

         Of the 4,000,000  aggregate  Stock Options  granted:  (i) 868,870 Stock
Options  (pre-Forward  Stock  Split) have been  exercised at $0.50 per share for
$434,435 in settlement  and  assignment of debt in accordance  with the terms of
the  respective  notice and  agreements of exercise of option  (2,606,610  Stock
Options  post-Forward  Stock  Split);  and (ii) 81,130  Stock  Options have been
exercised at $0.50 per share for $40,565 by employees or  consultants  of IMT in
accordance with the terms of the respective notice and agreements of exercise of
option  (243,390  Stock Options  post-Forward  Stock Split).  During fiscal year
ended  December  31, 2003,  the Company  entered  into  agreements  with certain
holders of debt of the Company  whereby the Company agreed to accept the debt as
consideration for the payment of the exercise price of Stock Options held by the
debt  holders,  who had provided  consulting  services to the Company  through a
contract with a third party.

         As of the date of this Annual Report,  an aggregate of 2,850,000  Stock
Options have been exercised and the Company has issued an aggregate of 2,850,000
(post-Forward Stock Split) shares of its Common Stock to such optionees.

<PAGE>

COMMON STOCK PURCHASE WARRANTS

         PRIVATE PLACEMENT OFFERING

         Pursuant to the terms of the private placement, the Company is offering
1,000,000  units in the capital of the Company (the "Unit"),  at a  subscription
price of $2.50 per Unit,  with each such Unit  being  comprised  of one share of
restricted  Common Stock and  one-half of one  non-transferable  share  purchase
warrant (the "Warrant").  Each such whole Warrant entitles the holder thereof to
purchase one additional share of restricted Common Stock at an exercise price of
$5.00 per Warrant  for a period  commencing  on the date of the  issuance of the
Unit by the  company  and ending on December  31,  2004.  As of the date of this
Annual Report,  the Company has sold 100,000 Units  consisting of 100,000 shares
of Common Stock and 50,000 Warrants.

<TABLE>
<CAPTION>

                      Equity Compensation Plan Information
--------------------------------------------------------------------------------------------------------------
                           Number of Securities      Weighted-Average Exercise       Number of Securities
                            To be Issued Upon          Price of Outstanding        Remaining Available for
Plan Category          Exercise of Outstanding           Options, Warrants          Future Issuance Under
                          Options, Warrants                 and Rights            Equity Compensation Plans
                              and Rights                                            (excluding column (a))
                                  (a)                           (b)                          (c)
--------------------------------------------------------------------------------------------------------------
<S>                                <C>                           <C>                           <C>
Equity Compensation                 n/a                          n/a                             n/a
Plans Approved by
Security Holders

Equity Compensation                50,000                        $5.00                         450,000
Plans Not Approved by
Security Holders -
Warrants

Total                              50,000
--------------------------------------------------------------------------------------------------------------
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES AND CHANGES IN CONTROL OF THE COMPANY

         As of the date of this  Annual  Report  and  during  fiscal  year ended
December  31,  2003,  to  provide  capital,  the  Company  sold stock in private
placement  offerings,  issued  stock in  exchange  for debts of the  Company  or
pursuant to contractual  agreements as set forth below.  See "Part III. Item 11.
Security  Ownership  of Certain  Beneficial  Owners and  Management  and Related
Stockholder Matters."

AGREEMENT

         Pursuant to the terms and provisions of the Agreement,  on November 19,
2003, the Company issued 3,000,000 shares of its restricted  Common Stock to the
Lexington Shareholders in proportion to their respective holdings in Lexington.

PRIVATE PLACEMENT OFFERING

         As of the date of this  Annual  Report,  the  Company  is  engaged in a
private  placement  offering under  Regulation S and Rule 506 of Regulation D of
the Securities Act of 1933, as amended (the "1933 Securities Act").  Pursuant to
the terms of the private  placement,  the Company is offering 1,000,000 units in
the capital of the Company (the "Unit"),  at a  subscription  price of $2.50 per
Unit,  with each such Unit being  comprised  of one share of  restricted  Common
Stock  and  one-half  of  one  non-transferable   share  purchase  warrant  (the
"Warrant").  Each such whole Warrant entitles the holder thereof to purchase one
additional  share of restricted  Common Stock at an exercise  price of $5.00 per
Warrant for a period  commencing  on the date of the issuance of the Unit by the

<PAGE>

Company and ending on December 31, 2004.  As of the date of this Annual  Report,
the  Company has sold  100,000  Units at $2.50 per Unit,  consisting  of 100,000
(pre-Forward Stock Split) shares of restricted Common Stock and 50,000 Warrants,
for aggregate  gross  proceeds of $250,000.  The per share price of the offering
was  arbitrarily  determined  by the Board of Directors  based upon  analysis of
certain factors  including,  but not limited to, stage of development,  industry
status, investment climate, perceived investment risks, assets and net estimated
worth of the Company.  The Company  issued shares of restricted  Common Stock to
one  investor,  who was deemed an  accredited  investor  as that term is defined
under  Regulation  D.  The  investor  executed  a  subscription   agreement  and
acknowledged that the securities to be issued have not been registered under the
1933  Securities  Act,  that the investor  understood  the  economic  risk of an
investment in the  securities,  and that the investor had the opportunity to ask
questions of and receive  answers from the Company's  management  concerning any
and all matters  related to acquisition of the  securities.  No underwriter  was
involved in the transaction.

DEBT SETTLEMENTS

         On October 15, 2003,  the Board of Directors of the Company  authorized
the  execution  of a  settlement  agreement  between the Company and ICI and the
subsequent   issuance  of  100,000  shares  of  its   restricted   Common  Stock
(post-Reverse Stock Split) as follows:

         (a) The  Company  had  incurred  a debt to ICI for (i)  prior  services
rendered by ICI to the Company  pursuant to the  Consulting  Services  Agreement
before the acquisition of Lexington  including,  but not limited to,  financial,
administrative  and  managerial;  and  (ii)  prior  advances  made by ICI to the
Company as evidenced by certain  promissory notes and accrued interest  thereon.
Therefore, the Company and ICI entered into a settlement agreement dated October
15,  2003 (the "ICI  Settlement  Agreement").  Pursuant  to the terms of the ICI
Settlement  Agreement,  (i) the Company  agreed to settle the debt due and owing
ICI  by  the  issuance  of  100,000  (pre-Forward  Stock  Split)  shares  of its
restricted  Common  Stock;  and (ii) ICI  agreed to accept the  issuance  of the
100,000   (pre-Forward  Stock  Split)  shares  of  restricted  Common  Stock  as
settlement  and full  satisfaction  of a portion  of the  aggregate  debt in the
amount of $250,000  outstanding  in  connection  with  services  rendered to the
Company prior to the acquisition of Lexington.

         On March 15, 2003, the Board of Directors of the Company authorized the
execution of settlement  agreements between the Company and certain creditors of
the Company,  and the subsequent issuance of 63,001,343 shares of its restricted
Common Stock (pre-Reverse Stock Split) as follows.

         (b) The Company had incurred a debt  inclusive  of accrued  interest in
the aggregate amount of $659,862.25 to Sonanini  Holdings Ltd.  ("Sonanini") for
prior advances made by Sonanini to the Company  evidenced by certain  promissory
notes and accrued interest thereon.  Therefore, the Company and Sonanini entered
into a  settlement  agreement  dated  March 25, 2003 (the  "Sonanini  Settlement
Agreement"). Pursuant to the terms of the Sonanini Settlement Agreement, (i) the
Company  agreed  to  settle  the  $659,862.25  aggregate  debt due and  owing to
Sonanini by the issuance of 32,993,113  shares of its restricted Common Stock at
the rate of $0.02 per share  (based on the average  trading  price of $0.013 per
share on total volume of 1,382,900  shares of the Company's Common Stock trading
on the OTC Bulletin  Board from October 1, 2002 to January 17,  2003);  and (ii)
Sonanini  agreed to accept the issuance of the  32,993,113  shares of restricted

<PAGE>

Common Stock as settlement and full  satisfaction  of the aggregate debt due and
owing it as of the date of the Sonanini Settlement Agreement.

         (c) The Company had incurred a debt  inclusive  of accrued  interest in
the  aggregate  amount  of  $600,164.60  to  TriStar  Financial  Services,  Inc.
("TriStar") for (i) prior services  rendered by TriStar on behalf of the Company
including,  but not limited to, financial,  administrative  and managerial;  and
(ii)  prior  advances  made by  TriStar  to the  Company  evidenced  by  certain
promissory notes and accrued interest  thereon.  Therefore,  the Company and Tri
Star  entered  into a settlement  agreement  dated March 25, 2003 (the  "TriStar
Settlement  Agreement").  Pursuant  to  the  terms  of  the  TriStar  Settlement
Agreement,  (i) the Company agreed to settle the $600,164.60  debt due and owing
TriStar by the issuance of 30,008,230  shares of its restricted  Common Stock at
the rate of $0.02 per share  (based on the average  trading  price of $0.013 per
share on total volume of 1,382,900  shares of the Company's Common Stock trading
on the OTC Bulletin  Board from October 1, 2002 to January 17,  2003);  and (ii)
TriStar  agreed to accept the issuance of the  30,008,230  shares of  restricted
Common Stock as settlement and full  satisfaction  of the aggregate debt due and
owing it as of the date of the TriStar Settlement Agreement.

         On December 31, 2003, the Board of Directors of the Company  authorized
the  execution  of a settlement  agreement  between the Company and ICI, and the
subsequent  issuance  of  868,870   (pre-Forward  Stock  Split)  shares  of  its
restricted  Common Stock  pursuant to notice and election of exercise of options
as follows.

         (d) As of December  31,  2003,  the Company was  indebted to ICI in the
amount of $434,435 (the "Debt")  pursuant to services  rendered  pursuant to the
Consulting  Services Agreement and/or advances made. As of January 22, 2004, the
Debt was settled (of which $234,435 had been completed as at December 31, 2003).
Pursuant  to the  terms  and  provisions  of the  ICI  Settlement  Agreement,the
$434,435 due and owing to ICI was assigned by ICI to certain  designated holders
of Stock Options as payment for the exercise of their respective Stock Options.


<PAGE>


CONVERSION OF SERIES A AND SERIES B PREFERRED SHARES

         On March 15,  2003,  the Board of  Directors  of the  Company  received
certain conversion notices regarding conversion of Series A Preferred shares and
Series B Preferred  shares and all then accrued and unpaid dividends into shares
of Common Stock, and authorized the subsequent  issuance of 16,187,000 shares of
its restricted Common Stock (pre-Reverse Stock Split) as follows.

         (a) On March 15, 2003,  the Company  received  conversion  notices from
certain  holders  of  Series A  Preferred  shares.  Based  upon  the  respective
conversion  notices,  the  Board of  Directors  of the  Company  authorized  the
issuance of an aggregate  11,685,900 shares of Common Stock  (pre-Reverse  Stock
Split) as follows:  (i) 6,200,000  shares of Common Stock for the  conversion of
6,200,000  Series A Preferred  shares on a one-to-one  basis; and (ii) 5,485,900
shares of Common Stock for conversion of the accrued and unpaid dividends at the
conversion price of $0.25 per share.

         (b) On March 15, 2003,  the Company  received  conversion  notices from
certain  holders  of  Series B  Preferred  shares.  Based  upon  the  respective
conversion  notices,  the  Board of  Directors  of the  Company  authorized  the
issuance of an aggregate  4,501,100  shares of Common Stock  (pre-Reverse  Stock
Split) as follows:  (i) 2,510,000  shares of Common Stock for the  conversion of
2,510,000  Series B Preferred  shares on a one-to-one  basis; and (ii) 1,991,000
shares of Common Stock for conversion of the accrued and unpaid dividends at the
conversion price of $0.50 per share.

PARC PLACE INVESTMENTS AG

         On November 20, 2003, the Company and Parc Place  Investments AG ("Parc
Place") entered into a financial  consulting  services agreement (the "Financial
Consulting  Agreement").  Pursuant to the terms and  provisions of the Financial
Consulting  Agreement:  (i) Parc  Place  agreed  to be  engaged  as a  financial
consultant to the Company and to render advice,  consultation,  information  and
services  regarding  corporate finance and other financial service matters;  and
(ii) the  Company  agreed to issue  finder's  fees  payable to Parc Place in the
aggregate  of twenty  percent  (20%) of private  placement  capital  raised from
European  sources and received by the Company due to the direct  efforts of Parc
Place,  such amount to be paid in cash up to a maximum of ten  percent  (10%) of
the capital  raised and balance by issuance of shares of its  restricted  Common
Stock at $0.001 per share.

         As of the date of this Annual Report, the Company has issued nil shares
of its  restricted  Common  Stock to Parc  Place  pursuant  to the  terms of the
agreement.

         However,  on or about  October 13,  2003,  the Company  agreed to issue
10,000 restricted shares of Common Stock at a deemed price of $1.11 per share as
partial payment for a prior debt incurred.

<PAGE>

FORWARD STOCK SPLIT

         On January 14, 2004, the Board of Directors of the Company  pursuant to
minutes of written consent in lieu of a special meeting  authorized and approved
the Forward Stock Split.  The Forward Stock Split was effectuated  with a record
date of January 26, 2004 upon filing the appropriate  documentation with NASDAQ.
Pursuant  to the  Forward  Stock  Split,  the  Company  issued an  aggregate  of
approximately  8,562,368  shares of its Common  Stock.  The Forward  Stock Split
increased  the  Company's  issued and  outstanding  shares of Common  Stock from
4,281,184 to approximately 12,843,552 shares of Common Stock.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following  discussions  of the results of operations  and financial
position  of the  Company  should  be read in  conjunction  with  the  financial
statements  and notes  pertaining  to them that  appear  elsewhere  in this Form
10-KSB.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FOR THE PERIOD FROM SEPTEMBER 29, 2003 (INCEPTION) TO DECEMBER 31, 2003

         The  Company's  consolidated  results of  operations  include  those of
Lexington  since  September 29, 2003  (inception) and those of the Company since
the date of the acquisition of Lexington effective November 19, 2003.

         The  Company's  net loss for fiscal  year ended  December  31, 2003 was
approximately ($42,149). During fiscal year ended December 31, 2003, the Company
recorded no income.

         During  fiscal year ended  December  31,  2003,  the  Company  recorded
operating  expenses of $42,149.  During fiscal year ended December 31, 2003, the
Company's  operating expenses consisted primarily of: (i) $23,578 as general and
administrative  expenses;  (ii) $9,410 as interest expense;  and (iii) $9,161 as
professional  fees.  General  and  administrative   expenses  generally  include
corporate  overhead,   financial  and  administrative  contracted  services  and
consulting costs.

         During  fiscal year ended  December 31, 2003,  an aggregate of $120,000
was incurred payable to Investor Communications International,  Inc. ("ICI") for
amounts due and owing for operational  management,  administrative and financial
services  rendered.  During fiscal year ended December 31, 2003,  aggregate cash
advances of $47,000 were made by ICI and other  shareholders  to the Company and
interest accrued on such outstanding  advances in the amount of $84,599.  During
fiscal year ended  December 31,  2003,  the Company  paid  $47,500.  Also during
fiscal year 2003, the Company  settled  $250,000 due to ICI through the issuance
of 100,000  (pre-Forward Stock Split) shares of the Company's  restricted Common
Stock  and a  further  $434,435  owing  to ICI was  assigned  by ICI to  certain
designated  holders  of Stock  Options  as  payment  for the  exercise  of their
respective   Stock   Options.    The   Company's    President/Chief    Executive
Officer/Director, Grant Atkins, and Chief Financial Officer, Vaughn Barbon, were
employed by ICI and part of the management  team provided by ICI to the Company.
During fiscal year ended December 31, 2003, ICI paid an aggregate of $19,625 and
$15,000 to Grant Atkins and Vaughn Barbon,  respectively,  for services provided
to the Company and its subsidiary.

         The Company and ICI entered  into a two-year  consulting  services  and
management   agreement   dated  January  1,  1999  (the   "Consulting   Services
Agreement"),  whereby ICI performs a wide range of  management,  administrative,
financial,  marketing and public company services including, but not limited to,
the following:  (i) international  business relations and strategy  development,
(ii) shareholder  liaison,  (iii) corporate public relations,  press release and
public information distribution, (iv) property exploration management, including

<PAGE>

administration of metallurgical development, metallurgical liaison, BLM liaison,
engineering  company  liaison,   drilling  administration,   geologist  liaison,
mapping, survey and catalogue,  geostatistical liaison,  environmental research,
geological reports  compilation and due diligence efforts,  (v)  administration,
including  auditor  and  legal  liaison,  media  liaison,  corporate  minutebook
maintenance and record keeping,  corporate  secretarial  services,  printing and
production,  office and general duties, and (vi) financial and business planning
services,  including  capital and  operating  budgeting,  banking,  bookkeeping,
documentation,   database  records,  preparation  of  financial  statements  and
creation of annual reports.  On January 1, 2001, the Company and ICI renewed the
Consulting Services Agreement for an additional  two-year period.  Subsequent to
January 1, 2003, the Consulting Services Agreement has been terminated.

         As discussed  above,  the net loss  incurred  during  fiscal year ended
December  31,  2003 is  attributable  primarily  to general  and  administrative
expenses.  The Company's net loss during fiscal year ended December 31, 2003 was
approximately  ($42,149)  or $0.01 per share.  The  weighted  average  number of
shares  outstanding  were  10,303,797  for fiscal year ended  December  31, 2003
(which  has  been  restated  in  accordance  with  the  Reverse  Stock  Split of
one-for-three  hundred  effected  August 9, 2003 and the Forward  Stock Split of
three for one effected January 26, 2004).

LIQUIDITY AND CAPITAL RESOURCES

         The Company's financial  statements have been prepared assuming that it
will continue as a going concern and,  accordingly,  do not include  adjustments
relating to the  recoverability  and realization of assets and classification of
liabilities  that might be necessary should the Company be unable to continue in
operation.

FISCAL YEAR ENDED DECEMBER 31, 2003

         As of fiscal year ended December 31, 2003, the Company's current assets
were $351,870 and its current  liabilities were $1,169,688,  which resulted in a
working capital deficit of $817,818.  As of fiscal year ended December 31, 2003,
the  Company's  total assets were  $471,870  consisting of (i) $381,420 in cash;
(ii) $450 in prepaid  expenses;  and (iii)  $120,000 in valuation of oil and gas
properties.  As of fiscal year ended  December 31,  2003,  the  Company's  total
liabilities were $1,169,688 consisting of: (i) $350,000 in drilling obligations;
(ii) $796,467 to a related  parties;  and (iii) $23,221 in accounts  payable and
accrued liabilities.

         Stockholders'  deficit  for fiscal  year ended  December  31,  2003 was
($697,818).

         The  Company  has not  generated  positive  cash flows  from  operating
activities.  For fiscal year ended  December  31,  2003,  net cash flows used in
operating  activities was ($58,323)  consisting of: (i) ($42,149) net loss; (ii)
($15,724) in accounts payable; and (iii) ($450) in prepaid expenses.

         Net cash flows used in investing  activities  was ($119,100) for fiscal
year ended December 31, 2003  consisting  primarily of ($120,000) in acquisition
of oil and gas properties.

<PAGE>

         Net cash flows from  financing  activities was $528,843 for fiscal year
ended  December 31, 2003  consisting of: (i) $278,543 in advances  payable;  and
(ii) $250,300 in proceeds on sale of Common Stock.

PLAN OF OPERATION

         As of the date of this Annual Report, there has been no income realized
from the business  operations of the Company.  The Company's  primary  source of
financing  during the prior fiscal years has been from proceeds  received by the
Company from (i) the conversion of Series A Preferred  shares into shares of the
Company's  Common  Stock at the  redemption  price of $0.25 per share;  (ii) the
conversion  of Series B Preferred  shares into  shares of the  Company's  Common
Stock at the redemption price of $0.50 per share; (iii) advances provided to
the Company as debt; and (iv) private placement offerings.

         As of December 31, 2002, there were 6,200,000 Series A Preferred shares
issued and  outstanding.  Each Series A Preferred share is convertible  into one
share of Common Stock of the Company and all then  accrued and unpaid  dividends
are convertible into Common Stock at the conversion price of $0.25 per share. As
of December 31, 2002,  there were 2,510,000 Series B Preferred shares issued and
outstanding.  Each Series B  Preferred  share is  convertible  into one share of
Common  Stock of the  Company  and all then  accrued  and unpaid  dividends  are
convertible into Common Stock at the conversion price of $0.50 per share.

         On March 15, 2003,  the Company  received  conversion  notices from all
remaining  holders  of Series A  Preferred  shares.  Based  upon the  respective
conversion  notices,  the  Board of  Directors  of the  Company  authorized  the
issuance of an aggregate  11,685,900 shares of Common Stock  (pre-Reverse  Stock
Split) as follows:  (i) 6,200,000  shares of Common Stock for the  conversion of
6,200,000  shares of Series A Preferred  Stock on a one-to-one  basis;  and (ii)
5,485,900  shares of Common  Stock for  conversion  of the  accrued  and  unpaid
dividends at the conversion price of $0.25 per share.

         On March 15, 2003,  the Company  received  conversion  notices from all
remaining  holders  of Series B  Preferred  shares.  Based  upon the  respective
conversion  notices,  the  Board of  Directors  of the  Company  authorized  the
issuance of an aggregate  4,501,100  shares of Common Stock  (pre-Reverse  Stock
Split) as follows:  (i) 2,510,000  shares of Common Stock for the  conversion of
2,510,000  shares of Series B Preferred  Stock on a one-to-one  basis;  and (ii)
1,991,000  shares of Common  Stock for  conversion  of the  accrued  and  unpaid
dividends at the conversion price of $0.50 per share.

FUNDING

         In accordance  with the  acquisition  of  Lexington,  management of the
Company  anticipates  a possible  increase  in  operating  expenses  and capital
expenditures relating to oil and gas operating properties and acquisitions.  The
Company may finance these expenses with further issuances of Common Stock of the
Company.  The Company believes that any anticipated private placements of equity
capital and debt financing, if successful, may be adequate to fund the Company's
operations  over the next six months.  Thereafter,  the Company  expects it will
need to raise additional capital to meet long-term operating  requirements.  The
Company  may  encounter  business   endeavors  that  require   significant  cash
commitments  or  unanticipated  problems  or  expenses  that  could  result in a
requirement  for  additional  cash  before  that  time.  If the  Company  raises
additional  funds through the issuance of equity or convertible  debt securities

<PAGE>

other than to current  shareholders,  the  percentage  ownership  of its current
shareholders   would  be  reduced,   and  such  securities  might  have  rights,
preferences or privileges senior to its common stock.  Additional  financing may
not be available  upon  acceptable  terms,  or at all. If adequate funds are not
available or are not available on acceptable  terms, the Company may not be able
to take advantage of prospective new business endeavors or opportunities,  which
could significantly and materially restrict the Company's business operations.

MATERIAL COMMITMENTS

         A significant and estimated  commitment for the Company for fiscal year
2004 is the principal  amount of $790,345 of which  $200,000 was assigned by ICI
to IMT  designated  stock  option  holders.

         A significant and estimated  commitment for the Company for fiscal year
2004 relate to the equity drilling  agreements with three private investors (the
"Funding Investors") for the funding for the Kellster No. 1 coal bed methane gas
well. The Funding  Investors each provided  one-third of the  Authorization  For
Expenditure  ("AFE")  capital  estimated at $360,000 for the Kellster No. 1 coal
bed methane gas well.  As At December  31,  2003  $10,000 was  advanced  and the
balance of $350,000 has been recorded as a drilling obligation.

OFF-BALANCE SHEET ARRANGEMENTS

         As of the date of this Annual  Report,  the  Company  does not have any
off-balance  sheet  arrangements  that  have  or are  reasonably  like to have a
current  or future  effect on the  Company's  financial  condition,  changes  in
financial  condition,  revenues or expenses,  results of operations,  liquidity,
capital  expenditures or capital  resources that are material to investors.  The
term "off-balance sheet arrangement" generally means any transaction,  agreement
or other  contractual  arrangement  to which an entity  unconsolidated  with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee  contract,  derivative  instrument or variable  interest;  or (ii) a
retained or contingent  interest in assets transferred to such entity or similar
arrangement  that serves as credit,  liquidity  or market risk  support for such
assets.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June  2001,  the FASB  issued  SFAS No.  143  "Accounting  for Asset
Retirement  Obligations" which establishes standards for the initial measurement
and subsequent accounting for obligations associated with the sale, abandonment,
or other disposal of long-lived  tangible  assets arising from the  acquisition,
construction or development and for normal  operations of such assets.  SFAS 143
is effective  for fiscal years  beginning  after June 15, 2002.  The adoption of
SFAS 143 has not had any impact on the Company's  financial  position or results
of operations.

         In June 2002,  the FASB  issued  SFAS No.  146,  "Accounting  for Costs
Associated  with Exit or Disposal  Activities."  Such  standard  requires  costs
associated with exit or disposal  activities  (including  restructurings)  to be
recognized  when the costs are incurred,  rather than at a date of commitment to
an exit or disposal plan. SFAS No. 146 nullifies 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)."  Under SFAS No.
146, a liability related to an exit or disposal activity is not recognized until
such  liability has actually  been incurred  whereas under EITF Issue No. 94-3 a
liability  was  recognized  at the time of a  commitment  to an exit or disposal
plan.  The  provisions  of this  standard  are  effective  for exit or  disposal
activities  initiated  after December 31, 2002. The adoption of SFAS 146 did not
have a  material  effect on the  Company's  financial  position  or  results  of
operations.

         On  April  30,  2003,  the FASB  issued  SFAS No.  149,  "Amendment  of
Statement 133 on Derivative  Instruments and Hedging  Activities".  SFAS No. 149
amends and clarifies  accounting for derivative  instruments,  including certain
derivative  instruments embedded in other contracts,  and for hedging activities
under SFAS No. 133. The new guidance  amends SFAS No. 133 for decisions  made as
part of the Derivatives  Implementation  Group ("DIG") process that  effectively
required amendments to SFAS No. 133, and decisions made in connection with other
FASB  projects  dealing  with  financial  instruments  and  in  connection  with
implementation issues raised in relation to the application of the definition of
a derivative that contains financing components.  In addition, it clarifies when
a derivative  contains a financing  component that warrants special reporting in
the statement of cash flows.  SFAS No. 149 is effective  for  contracts  entered
into or modified  after June 30, 2003 and for hedging  relationships  designated
after June 30, 2003. The Company adopted SFAS 149, as required,  on July 1, 2003
with no material impact on its financial statements.

         In May 2003, SFAS 150,  "Accounting for Certain  Financial  Instruments
with Characteristics of both Liabilities and Equity", was issued. This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were previously classified as equity. Generally, a financial instrument, whether
in the form of shares or otherwise,  that is mandatorily  redeemable,  i.e. that
embodies  an  unconditional  obligation  requiring  the  issuer  to redeem it by

<PAGE>

transferring its shares or assets at a specified or determinable date (or dates)
or upon an event that is certain to occur, must be classified as a liability (or
asset in some  circumstances).  In some cases,  a financial  instrument  that is
conditionally  redeemable  may  also be  subject  to the  same  treatment.  This
Statement does not apply to features that are embedded in a financial instrument
that is not a derivative (as defined) in its entirety. For public entities, this
Statement is effective for financial  instruments entered into or modified after
May 31, 2003.  The adoption of SFAS 150 did not affect the  Company's  financial
position or results of operations.

         In  November  2002,  the  FASB  issued  FASB   Interpretation  No.  45,
"Guarantor's  Accounting for Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of  Others,  an  interpretation  of FASB
Statements  No. 5, 57 and 107 and  rescission  of FASB  Interpretation  No.  34,
Disclosure of Indirect  Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45
clarifies the requirements for a guarantor's  accounting for, and disclosure of,
certain  guarantees  issued and  outstanding.  It also  requires a guarantor  to
recognize,  at the  inception of a guarantee,  a liability for the fair value of
the obligation  undertaken in issuing the guarantee.  This  interpretation  also
incorporates without reconsideration the guidance in FASB Interpretation No. 34,
which is being  superseded.  The adoption of FIN 45 did not affect the Company's
financial position or results of operations.

         In  January  2003,  the  FASB  issued  FASB   Interpretation   No.  46,
Consolidation of Variable  Interest  Entities,  an  interpretation of Accounting
Research Bulletins ("ARB") No. 51, Consolidated Financial Statements ("FIN 46").
Fin 46 applies  immediately to variable  interest entitles created after January
31, 2003,  and in the first  interim  period  beginning  after June 15, 2003 for
variable interest entities created prior to January 31, 2003. The interpretation
explains  how to  identify  variable  interest  entities  and how an  enterprise
assesses  its  interest  in a  variable  interest  entity to decide  whether  to
consolidate that entity.  The  interpretation  requires existing  unconsolidated
variable interest entities to be consolidated by their primary  beneficiaries if
the entities do not effectively disperse risks among parties involved.  Variable
interest  entities  that  effectively  disperse  risks will not be  consolidated
unless a single  party  holds an  interest  or  combination  of  interests  that
effectively recombines risks that were previously dispersed. The adoption of FIN
46 did not affect the Company's financial position or results of operations.


ITEM 7. FINANCIAL STATEMENTS

         The  information  required  under  Item  310(a)  of  Regulation  S-B is
included in this report as set forth in the "Index to Financial Statements".

Index to Financial Statements

         Auditor's Report dated March 15, 2004
         Consolidated Balance Sheet
         Consolidated Statement of Operations
         Consolidated Statement of Stockholders' Equity
         Consolidated Statement of Cash Flows
         Notes to Consolidated Financial Statements


<PAGE>













                            LEXINGTON RESOURCES, INC.
                        (Formerly Intergold Corporation)

                         (an exploration stage company)

                        CONSOLIDATED FINANCIAL STATEMENTS


                                DECEMBER 31, 2003





















INDEPENDENT AUDITORS' REPORT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF OPERATIONS

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                      F-1


<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the  Stockholders  and  Board  of  Directors  of  Lexington  Resources,  Inc.
(formerly Intergold Corporation).

We have audited the  consolidated  balance  sheet of Lexington  Resources,  Inc.
(formerly Intergold  Corporation),  an exploration stage company, as at December
31, 2003 and the consolidated statement of operations,  stockholders' equity and
cash flows for the period from  September 29, 2003  (inception)  to December 31,
2003 as  described in Note 1 to the  financial  statements.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit in  accordance  with United  States  generally  accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain  reasonable  assurance  whether  the  financial  statements  are  free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  these consolidated  financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2003
and the  results  of its  operations  and its  cash  flows  and the  changes  in
stockholders'  equity for the period  from  September  29, 2003  (inception)  to
December 31, 2003.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial  statements,  to date the Company has not  generated  any  significant
revenues from operations and requires  additional  funds to meet its obligations
and the costs of its operations. These factors raise substantial doubt about the
Company's  ability to continue as a going  concern.  Management's  plans in this
regard are  described  in Note 1. The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.



                                             "DALE MATHESON CARR-HILTON LABONTE"

                                                           CHARTERED ACCOUNTANTS



Vancouver, B.C.
February 19, 2004, except for Note 11 which is dated March 12, 2004.


                                      F-2


<PAGE>


                            LEXINGTON RESOURCES, INC.
                        (Formerly Intergold Corporation)
                         (an exploration stage company)

                           CONSOLIDATED BALANCE SHEET


                                                               December 31, 2003
--------------------------------------------------------------------------------


CURRENT ASSETS
   Cash                                                             $  351,420
   Prepaid expenses                                                         450
-------------------------------------------------------------------------------
                                                                        351,870
OIL AND GAS PROPERTIES (Note 4)                                         120,000
-------------------------------------------------------------------------------
                                                                    $   471,870
===============================================================================



CURRENT LIABILITIES
   Accounts payable and accrued liabilities                         $    23,221
   Drilling obligations (Note 5)                                        350,000
   Due to related parties (Note 8)                                      796,467
-------------------------------------------------------------------------------

                                                                      1,169,688
-------------------------------------------------------------------------------

CONTINGENCIES AND COMMITMENTS (Notes 1, 4, 5 & 11)

STOCKHOLDERS' EQUITY (DEFICIENCY) (Note 6)
   Common stock $.00025 par value; 200,000,000 shares authorized
   Preferred stock, $.001 par value; 75,000,000 shares authorized
Issued and outstanding:
      12,843,552 common shares                                            3,211
   Additional paid-in capital                                           761,937
   Common stock purchase warrants                                        12,500
   Deficit accumulated during the exploration stage                  (1,475,466)
-------------------------------------------------------------------------------

                                                                       (697,818)
-------------------------------------------------------------------------------

                                                                    $   471,870
===============================================================================

BASIS OF PRESENTATION (Note 1)

===============================================================================


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


                                      F-3


<PAGE>


                            LEXINGTON RESOURCES, INC.
                        (Formerly Intergold Corporation)
                         (an exploration stage company)

                      CONSOLIDATED STATEMENT OF OPERATIONS



                                                             For the period from
                                               September 29, 2003 (inception) to
                                                               December 31, 2003
--------------------------------------------------------------------------------
                                                                        (Note 1)

EXPENSES
   General and administrative                             $    23,578
   Interest expense                                             9,410
   Professional fees                                            9,161
--------------------------------------------------------------------------------

                                                               42,149
--------------------------------------------------------------------------------

NET LOSS FOR THE PERIOD                                     $ (42,149)
================================================================================




BASIC NET INCOME (LOSS) PER SHARE                              $(0.00)
================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                 10,303,797
================================================================================


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


                                      F-4


<PAGE>

<TABLE>
<CAPTION>


                            LEXINGTON RESOURCES, INC.
                        (Formerly Intergold Corporation)
                         (an exploration stage company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

     FOR THE PERIOD FROM SEPTEMBER 29, 2003 (INCEPTION) TO DECEMBER 31, 2003

                                                                                                        Deficit
                                                                                                      Accumulated
                                                                        Additional    Common Stock       During
                                                  Common stock           Paid-In        Purchase      Exploration
                                             Shares         Amount       Capital        Warrants         Stage           Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>        <C>              <C>          <C>              <C>

Issued for cash at $.0001 per share         3,000,000       $    300   $          -     $      -     $         -      $       300
---------------------------------------------------------------------------------------------------------------------------------

Lexington balance, November 19, 2003        3,000,000            300              -            -                -             300
LRI balance, November 19, 2003 (Note 6)    10,593,552         39,833     15,981,933            -      (17,452,735)     (1,430,969)
Reverse acquisition recapitalization
adjustment                                 (3,000,000)       (37,485)   (15,981,933)           -       16,019,418               -
---------------------------------------------------------------------------------------------------------------------------------

Balance post-reverse acquisition           10,593,552          2,648              -            -       (1,433,317)     (1,430,669)
Private placement at $2.50 per unit           300,000             75        237,425       12,500                -         250,000
Issuance of common stock on exercise of
options                                     1,650,000            413        274,587            -                -         275,000
Issuance of common stock on settlement
of debt at
$2.50 per share                               300,000             75        249,925            -                -         250,000
Net loss, period ended December 31, 2003            -              -              -            -          (42,149)        (42,149)
---------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                 12,843,552       $  3,211   $    761,937     $ 12,500     $ (1,475,466)    $  (697,818)
=================================================================================================================================

</TABLE>


All share  amounts  have been  restated  to reflect the 300:1  reverse  split in
November 2003 and the 3:1 forward split in January 2004. (Refer to Note 6.)

The Stockholders' Equity Statement above reflects Lexington prior to the reverse
acquisition and consolidated LRI post-reverse acquisition.


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


                                      F-5


<PAGE>


                            LEXINGTON RESOURCES, INC.
                        (Formerly Intergold Corporation)
                         (an exploration stage company)

                      CONSOLIDATED STATEMENT OF CASH FLOWS


                                                          For the period from
                                                           September 29, 2003
                                                               (inception) to
                                                            December 31, 2003
------------------------------------------------------------------------------
                                                                     (Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss) for the period                                 $ (42,149)
  Adjustments to reconcile net loss to net cash
    from operating activities:
  Changes in working capital assets and liabilities
       Prepaid expenses                                                 (450)
       Accounts payable                                              (15,724)
------------------------------------------------------------------------------

NET CASH FLOWS USED IN OPERATING ACTIVITIES                          (58,323)
------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Cash acquired on acquisition of Lexington Oil &
    Gas Ltd. Co.                                                         900
  Acquisition of oil and gas properties                             (120,000)
------------------------------------------------------------------------------

NET CASH FLOWS USED IN INVESTING ACTIVITIES                         (119,100)
------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Advances payable                                                   278,543
  Proceeds on sale of common stock                                   250,300
------------------------------------------------------------------------------

NET CASH FLOWS FROM FINANCING ACTIVITIES                             528,843
------------------------------------------------------------------------------

INCREASE IN CASH                                                     351,420

CASH, BEGINNING OF PERIOD                                                  -
------------------------------------------------------------------------------

CASH, END OF PERIOD                                                $ 351,420
==============================================================================

SUPPLEMENTAL CASH FLOW INFORMATION (Refer to Note 10.)


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


                                      F-6


<PAGE>


           LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
                         (an exploration stage company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 1:  NATURE OF CONTINUED OPERATIONS AND BASIS OF PRESENTATION
--------------------------------------------------------------------------------

By Share Exchange Agreement dated November 19, 2003, Lexington  Resources,  Inc.
(formerly Intergold Corporation) ("LRI" or "the Company"), a Nevada corporation,
acquired 100% of the issued and  outstanding  shares of Lexington Oil & Gas Ltd.
Co., (an  exploration  stage company)  ("Lexington"),  in exchange for 9,000,000
(3,000,000 pre January 2004 3:1 forward split) restricted shares of common stock
of the Company  representing  85% of the total issued and outstanding  shares of
the Company at the time. In connection with this transaction,  Intergold changed
its name to Lexington Resources, Inc. (Refer to Note 3.)

This acquisition has been accounted for as a reverse  acquisition with Lexington
being treated as the accounting parent and LRI, the legal parent,  being treated
as  the  accounting  subsidiary.   Accordingly,   the  consolidated  results  of
operations  of the Company  include  those of Lexington  for the period from its
inception on  September  29, 2003 and those of LRI since the date of the reverse
acquisition.   There  are  no  comparative  financial  statements  presented  as
Lexington had no operations in 2002.

Lexington is an Oklahoma Limited Liability Corporation incorporated on September
29, 2003.  Lexington is an  exploration  stage  company which was formed for the
purpose of the acquisition and development of oil and natural gas properties.

GOING CONCERN

These  financial  statements  have been  prepared in accordance  with  generally
accepted accounting principles in the United States of America with the on-going
assumption  applicable to a going concern which  contemplates the realization of
assets and the  satisfaction of liabilities and commitments in the normal course
of  business.  The  Company is an  exploration  stage  company  and its  general
business  strategy  is to acquire  oil and gas  properties  either  directly  or
through the acquisition of operating entities.  The continued  operations of the
Company and the  recoverability  of the carrying value of oil and gas properties
is dependent  upon the existence of  economically  recoverable  reserves and the
ability of the Company to obtain necessary financing to complete the development
of those reserves, and upon future profitable  production.  To date, the Company
has not generated revenues from operations,  has a working capital deficiency of
$817,818 and a stockholders' deficiency of $697,818, and will require additional
funds to meet  its  obligations  and the  costs  of its  operations.  Additional
recurring  operating losses are anticipated prior to the generation of operating
income and such losses may be  significant.  The Company is planning  additional
ongoing equity  financing by way of private  placements to fund its  obligations
and operations. (Refer to Notes 5 and 11).

The Company's future capital requirements will depend on many factors, including
costs of exploration of the properties,  cash flow from operations,  fluctuating
oil and gas commodity pricing, costs to complete well production,  if warranted,
and  competition  and  global  market  conditions.   The  Company's  anticipated
recurring  operating  losses and growing working capital needs will require that
it obtain additional capital to operate its business.  Further, the Company does
not have sufficient funds on hand to complete the exploration of the properties.
(Refer to Notes 4 and 5.)

The Company will depend almost  exclusively  on outside  capital to complete the
exploration and development of the oil and gas properties.  Such outside capital
will include the sale of additional stock and may include  commercial  borrowing
and other  sources  of debt  and/or  advances.  There can be no  assurance  that
capital will be available as necessary to meet these continuing  exploration and
development  costs or, if the  capital  is  available,  that it will be on terms
acceptable to the Company.  The issuances of additional equity securities by the
Company  may result in a  significant  dilution in the equity  interests  of its
current stockholders.  Obtaining commercial loans, assuming those loans would be
available, would increase the Company's liabilities and future cash commitments.
If the Company is unable to obtain  financing in the amounts and on terms deemed
acceptable, the future success of the Company may be adversely affected.

Given the Company's limited operating history,  lack of revenues,  and recurring
operating  losses,  there can be no assurance that it will be able to achieve or
maintain profitability. Accordingly, these factors raise substantial doubt about
the Company's ability to continue as a going concern.


                                      F-7


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

PRINCIPLES OF CONSOLIDATION
The consolidated  financial  statements  include the accounts of the Company and
its  wholly-owned  subsidiary,  Lexington Oil & Gas Ltd. Co. LLC  ("Lexington").
Lexington  was  acquired  by reverse  acquisition  on  November  19,  2003.  The
acquisition  of  Lexington  has been  accounted  for on the  purchase  method of
accounting.  All significant intercompany transactions and account balances have
been eliminated.

OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all costs related to the acquisition of methane,  petroleum,
and natural gas  interests  are  capitalized.  Such costs include land and lease
acquisition  costs,   annual  carrying  charges  of  non-producing   properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive  wells,  and direct  exploration  salaries and related  benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related  capitalized  costs without  recognition of a gain or loss unless
the  disposal  would  result in a change of 20 percent or more in the  depletion
rate. The Company currently operates solely in the U.S.A.

Depletion  and  depreciation  of the  capitalized  costs are computed  using the
units-of-production method based on the estimated proven reserves of oil and gas
determined by independent consultants.

Estimated future removal and site  restoration  costs are provided over the life
of proven  reserves on a  units-of-production  basis.  Costs,  which include the
costs  of  production  equipment  removal  and  environmental  remediation,  are
estimated  each  period  by  management  based on  current  regulations,  costs,
technology and industry  standards.  The charge is included in the provision for
depletion and depreciation and the actual  restoration  expenditures are charged
to the accumulated provision amounts as incurred.

The  Company  applies a ceiling  test to  capitalized  costs to ensure that such
costs do not exceed  estimated  future net revenues  from  production  of proven
reserves  at year end market  prices  less  future  production,  administrative,
financing,  site  restoration,  and  income  tax costs plus the lower of cost or
estimated  market  value  of  unproved  properties.  If  capitalized  costs  are
determined to exceed  estimated  future net  revenues,  a write-down of carrying
value is charged to depletion in the period.

EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing  earnings (loss) for the
period by the  weighted  average  number of common  shares  outstanding  for the
period.  Fully diluted earnings (loss) per share reflects the potential dilution
of securities by including other potential common stock,  including  convertible
preferred  shares,  in the weighted average number of common shares  outstanding
for a period  and is not  presented  where  the  effect  is  anti-dilutive.  The
presentation  is only of  basic  earnings  (loss)  per  share as the  effect  of
potential  dilution of securities  has no impact on the current  period's  basic
earnings per share.  Loss per share, as presented,  has been restated to reflect
all share  splits  described in Note 6. The  weighted  average  number of shares
outstanding  prior to the  reverse  acquisition  is deemed  to be the  number of
shares  issued  in  connection  with the  reverse  acquisition  being  9,000,000
(3,000,000 pre January 2004 3:1 forward split).

FINANCIAL INSTRUMENTS
The fair  value of the  Company's  financial  assets and  financial  liabilities
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments.

USE OF ESTIMATES
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those estimates.


                                      F-8


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------------------------------

STOCK-BASED COMPENSATION
In December  2002, the Financial  Accounting  Standards  Board issued  Financial
Accounting  Standard  No.  148,  "Accounting  for  Stock-Based   Compensation  -
Transition  and  Disclosure"   ("SFAS  No.  148"),  an  amendment  of  Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No.
123").  The  purpose of SFAS No. 148 is to: (1) provide  alternative  methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based  employee  compensation,  (2) amend the disclosure
provisions  to require  prominent  disclosure  about the effects on reported net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in interim
financial information.  The disclosure provisions of SFAS No. 148 were effective
for the Company for the period ended December 31, 2003.

The  Company  has  elected  to account  for  stock-based  employee  compensation
arrangements  using the  intrinsic  value based  method in  accordance  with the
provisions of Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees",  ("APB No. 25") and comply with the disclosure  provisions
of SFAS No. 123 as amended by SFAS No. 148 as described above. Under APB No. 25,
compensation expense is recognized based on the difference,  if any, on the date
of grant between the estimated fair value of the Company's  stock and the amount
an employee  must pay to acquire the stock.  Compensation  expense is recognized
immediately  for  past  services  and  pro-rata  for  future  services  over the
option-vesting  period.  In addition,  with respect to stock options  granted to
employees,  the Company provides  pro-forma  information as required by SFAS No.
123  showing  the  results  of  applying   the  fair  value   method  using  the
Black-Scholes option pricing model.

In accordance with SFAS No. 123, the Company applies the fair value method using
the  Black-Scholes  option-pricing  model in accounting  for options  granted to
consultants.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or services from other than  employees in accordance  with SFAS No. 123
and the  conclusions  reached  by the  Emerging  Issues  Task Force in Issue No.
96-18.   Costs  are  measured  at  the  estimated   fair  market  value  of  the
consideration  received or the  estimated  fair value of the equity  instruments
issued,  whichever is more reliably measurable.  The value of equity instruments
issued for  consideration  other than  employee  services is  determined  on the
earliest  of a  performance  commitment  or  completion  of  performance  by the
provider of goods or services as defined by EITF 96-18.

The  Company  has  also  adopted  the  provisions  of the  Financial  Accounting
Standards  Board  Interpretation  No.44,  Accounting  for  Certain  Transactions
Involving  Stock  Compensation - An  Interpretation  of APB Opinion No. 25 ("FIN
44"), which provides guidance as to certain applications of APB 25.

INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  Under
this method,  deferred tax assets and  liabilities are recognized for the future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
balances.  Deferred tax assets and  liabilities  are measured  using  enacted or
substantially  enacted tax rates  expected to apply to the taxable income in the
years in which those  differences  are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in income in the  period  that  includes  the date of  enactment  or
substantial enactment. A valuation allowance is provided for deferred tax assets
if it is more  likely  than not that the  Company  will not  realize  the future
benefit, or if future deductibility is uncertain.

RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001,  the FASB issued  SFAS No. 143  "Accounting  for Asset  Retirement
Obligations"  which  establishes  standards  for  the  initial  measurement  and
subsequent accounting for obligations associated with the sale, abandonment,  or
other  disposal of  long-lived  tangible  assets  arising from the  acquisition,
construction or development and for normal  operations of such assets.  SFAS 143
is effective  for fiscal years  beginning  after June 15, 2002.  The adoption of
SFAS 143 has not had any impact on the Company's  financial  position or results
of operations.


                                      F-9


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------------------------------

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." Such standard requires costs associated with
exit or disposal activities (including restructurings) to be recognized when the
costs are  incurred,  rather than at a date of commitment to an exit or disposal
plan.  SFAS No. 146 nullifies 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)."  Under SFAS No. 146, a
liability  related to an exit or disposal  activity is not recognized until such
liability  has actually been  incurred and becomes  determinable,  whereas under
EITF Issue No. 94-3 a liability  was  recognized at the time of commitment to an
exit or disposal plan. The provisions of this standard are effective for exit or
disposal activities  initiated after December 31, 2002. The adoption of SFAS 146
has not had any  impact  on the  Company's  financial  position  or  results  of
operations.

On April 30, 2003, the FASB issued SFAS No. 149,  "Amendment of Statement 133 on
Derivative  Instruments  and  Hedging  Activities".  SFAS  No.  149  amends  and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts,  and for hedging activities under SFAS
No. 133. The new guidance  amends SFAS No. 133 for decisions made as part of the
Derivatives  Implementation  Group  ("DIG")  process that  effectively  fequired
amendments  to SFAS No. 133, and decisions  made in  connection  with other FASB
projects   dealing  with   financial   instruments   and  in   connection   with
implementation issues raised in relation to the application of the definition of
a derivative that contains financing components.  In addition, it clarifies when
a derivative  contains a financing  component that warrants special reporting in
the statement of cash flows.  SFAS No. 149 is effective  for  contracts  entered
into or modified  after June 30, 2003 and for hedging  relationships  designated
after June 30, 2003. The Company adopted SFAS 149, as required,  on July 1, 2003
with no material impact on its financial statements.

In May 2003,  SFAS 150,  "Accounting  for  Certain  Financial  Instruments  with
Characteristics  of both  Liabilities  and Equity",  was issued.  This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were previously classified as equity. Generally, a financial instrument, whether
in the form of shares or otherwise,  that is mandatorily  redeemable,  i.e. that
embodies  an  unconditional  obligation  requiring  the  issuer  to redeem it by
transferring its shares or assets at a specified or determinable date (or dates)
or upon an event that is certain to occur, must be classified as a liability (or
asset in some  circumstances).  In some cases,  a financial  instrument  that is
conditionally  redeemable  may  also be  subject  to the  same  treatment.  This
Statement does not apply to features that are embedded in a financial instrument
that is not a derivative (as defined) in its entirety. For public entities, this
Statement is effective for financial  instruments entered into or modified after
May 31, 2003.  The adoption of SFAS 150 does not affect the Company's  financial
position or results of operations.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  for  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness of Others,  an  interpretation of FASB Statements No.
5, 57 and 107 and  rescission  of FASB  Interpretation  No.  34,  Disclosure  of
Indirect  Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 clarifies the
requirements  for a  guarantor's  accounting  for, and  disclosure  of,  certain
guarantees issued and outstanding. It also requires a guarantor to recognize, at
the inception of a guarantee,  a liability for the fair value of the  obligation
undertaken  in issuing the  guarantee.  This  interpretation  also  incorporates
without  reconsideration  the guidance in FASB  Interpretation  No. 34, which is
being  superseded.  The adoption of FIN 45 did not have a material effect on the
Company's financial statements.


NOTE 3 - ACQUISITION OF LEXINGTON OIL & GAS LTD. CO. LLC
--------------------------------------------------------------------------------

By Share Exchange  Agreement dated November 19, 2003, the Company  acquired 100%
of the  issued  and  outstanding  shares  of  Lexington  (an  exploration  stage
company),  in exchange  for  9,000,000  (3,000,000  pre January 2004 3:1 forward
split)  restricted  shares of common stock of the  Company.  As a result of this
transaction the former  stockholders of Lexington acquired  approximately 85% of
the total issued and outstanding  shares of the Company as at November 19, 2003,
resulting in a change in control of the Company.


                                      F-10


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 3 - ACQUISITION OF LEXINGTON OIL & GAS LTD. CO. LLC (CONT'D)
--------------------------------------------------------------------------------

During  January,  2004,  the  parties to the Share  Exchange  Agreement,  Orient
Exploration  Ltd.  ("Orient"),  Douglas  Humphreys  ("Humphreys"),  the Company,
Lexington,  and Paluca  Petroleum Inc.  ("Paluca")  reevaluated the terms of the
original  Share  Exchange  Agreement  and upon further  negotiations  desired to
modify the terms of the original  agreement in the best  interest of all parties
such that: (i) 2,250,000  shares of restricted  Common Stock of the Company held
of record by Humphreys were  transferred to Orient in  consideration  therefore;
(ii) the Company  assigned to Humphreys a 5% carried  working  interest in every
well drilled by the Company on the Wagnon Property;  (iii) the Company agreed to
allow Humphreys to participate up to an additional 5% working  interest in every
well drilled by the Company on the Wagnon  Property;  (iv) the Company agreed to
transfer to Paluca  certain  assets  previously  acquired by the Company  (which
included  working  interests  and net revenue  interests  in certain oil and gas
leases  located on the Doc Cole Property,  the Atwood Booch Sand  Property,  the
Jeneva Property and the Sasakwa Gilcrease Sand Property.

Management  of the Company  does not intend to proceed with the  acquisition  or
development  of  the  described  properties  as  set  out in  item  (iv)  due to
management's analysis that the properties do not contain the appropriate oil and
gas  development  elements  that form part of the  Company's  current  focus and
criteria for corporate oil and gas development initiatives. (See Note 11.)

Lexington is an Oklahoma Limited Liability Corporation incorporated on September
29, 2003 formed for the purpose of the  acquisition  and  development of oil and
natural gas properties in the United States,  concentrating  on coal bed methane
gas acquisition and production initiatives.

This acquisition has been accounted for as a  recapitalization  using accounting
principles  applicable to reverse  acquisitions  with Lexington being treated as
the  accounting  parent  (acquirer)  and LRI  being  treated  as the  accounting
subsidiary  (acquiree).  The value assigned to the capital stock of consolidated
LRI on  acquisition of Lexington is equal to the book value of the capital stock
of Lexington  plus the book value of the net assets  (liabilities)  of LRI as at
the date of the acquisition.

The  book  value  of  Lexington's   capital  stock  subsequent  to  the  reverse
acquisition is calculated and allocated as follows:

         Lexington capital stock                                    $       300
         LRI net assets (liabilities)                                (1,430,969)
                                                                    -----------

                                                                     (1,430,669)
         Charge to deficit on reverse acquisition                     1,433,317
                                                                    ------------

         Consolidated stock accounts post reverse acquisition       $     2,648
                                                                    ===========

These  consolidated  financial  statements  include the results of operations of
Lexington since September 29, 2003  (inception) and the results of operations of
LRI since the date of the reverse acquisition effective November 19, 2003. LRI's
results of operations  for the period from January 1, 2003 to September 30, 2003
have been  reported in the  Company's  September 30, 2003 filing on Form 10-QSB.
LRI's  operations  for the period from January 1, 2003 to November 18, 2003 have
been disclosed in the table in Note 6.

The weighted  average  number of shares  outstanding of LRI, for the period from
July 26, 1996  (inception) to November 18, 2003, is deemed to be 9,000,000 being
the  number  of  shares  issued  by LRI to effect  the  reverse  acquisition  of
Lexington.


NOTE 4 - OIL AND GAS PROPERTIES
--------------------------------------------------------------------------------

WAGNON LEASE
By agreement dated October 9, 2003,  Lexington acquired an interest in a section
of farm-out acreage with the intention to develop coal bed methane gas producing
wells in Pittsburg  County,  Oklahoma in  consideration  of $120,000.  Lexington
holds a 100% working interest and a 75% revenue interest in approximately  590.2
gross  undeveloped  acreage of a potential  gas  producing  property  located in
Pittsburg County, Oklahoma (the "Wagnon Property"). The gas interest relating to
the Wagnon Property is pursuant to a farm-out agreement between Oak Hills Energy
and the lessee of the Wagnon Property.


                                      F-11


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 4 - OIL AND GAS PROPERTIES (CONT'D)
--------------------------------------------------------------------------------

In  February  2004 a well on the  property  (Kellster  1-5  Well)  was put  into
production.  The Company plans to drill another two to three wells on the Wagnon
Property in the second quarter of 2004.

COAL CREEK PROSPECT
In March 2004 the Company  agreed to  conditional  terms to lease  approximately
2,500 acres to develop the Coal Creek Project in Hughes County,  Oklahoma.  (See
Note 11.)


NOTE 5:  DRILLING OBLIGATIONS
--------------------------------------------------------------------------------

During the period  ended  December  31,  2003 the  Company  entered  into equity
drilling  agreements with 3 private investors (the "Funding  Investors") for the
funding for its first well. The Funding Investors each provided one-third of the
Authorization  For  Expenditure  ("AFE")  capital  estimated at $360,000 for the
Company's  first well,  named  Kellster 5-1. As at December 31, 2003 $10,000 was
advanced and the balance of $350,000 has been recorded as a drilling obligation.

Wells to be drilled on the property will carry royalty interests totaling 25% to
land owners and property interest holders and carried working interests of 5% to
a land owner and 5% to a company related to a director of the Company. A company
related to a director of the Company also owns a non-carried working interest of
10%.

The Funding  Investors  were provided an 80% working  interest,  60% net revenue
interest, in the well until their invested capital for the well is repaid, after
which  time the  Funding  Investors  will  revert to a 20.1%  working  interest,
15.075% net  revenue  interest in the  Kellster  5-1 well  located on the Wagnon
Lease.  Oakhills  Energy,  Inc.,  the operator of the well,  will "back-in" to a
reversionary  6.7%  Working  Interest  after  invested  capital is repaid to the
Funding  Investors.  Lexington  will  back-in to a  reversionary  53.2%  Working
Interest.

In February  2004 the Company  advanced  the balance of the  drilling  funds and
successfully  completed  its first  well  (Kellster  1-5) on the  property.  The
Company plans to drill an additional  two to three wells on this property in the
second quarter of 2004.


NOTE 6:  STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

The  authorized  capital of the Company  consists of  200,000,000  voting common
shares with $.00025 par value, and 75,000,000  non-voting  preferred shares with
$.001 par value.

REVERSE STOCK SPLIT
Effective  August  7,  2003 the  Company  completed  a  reverse  stock  split of
one-for-three hundred of the Company's outstanding common stock,  resulting in a
reduction  of the then  outstanding  common  stock  from  156,328,943  shares to
521,184  shares.  The par value and the number of authorized but unissued shares
of the  Company's  common stock was not changed as a result of the reverse stock
split.

FORWARD STOCK SPLIT
On January 26, 2004 the Company  forward split its common shares on the basis of
three new shares for each common share outstanding. The par value and the number
of authorized but unissued shares of the Company's  common stock was not changed
as a result of the forward stock split.

Unless  otherwise   noted,  all  references  to  common  stock,   common  shares
outstanding,  average numbers of common shares outstanding and per share amounts
in these  Financial  Statements and Notes to Financial  Statements  prior to the
effective  date of the  reverse  stock  split have been  restated to reflect the
one-for-three hundred reverse stock split and the three for one forward split on
a retroactive basis.

LEXINGTON  CAPITAL STOCK  TRANSACTIONS  DURING THE PERIOD  SEPTEMBER 29, 2003 TO
NOVEMBER 19, 2003: On September 29, 2003 Lexington  issued  3,000,000  shares of
its $.0001 par value common shares for total proceeds of $300.


                                      F-12


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 6:  STOCKHOLDERS' EQUITY (CONT'D)
--------------------------------------------------------------------------------

LRI  CAPITAL  STOCK  TRANSACTIONS  DURING  THE PERIOD  JANUARY  1, 2003  THROUGH
NOVEMBER 19, 2003:
On March 15, 2003 the Company  settled  $1,260,027  in loans,  notes and accrued
interest in exchange  for the issuance of 210,004  post-reverse-split  shares of
the Company's common stock.

On March 15, 2003 the holders of 6,200,000  Series A preferred shares elected to
convert  their  shares  to  common  stock.  As a  result  cumulative  undeclared
dividends totaling $1,371,475 became payable on March 15, 2003. Accordingly, the
Company issued 38,953 post reverse-split  shares of common stock in exchange for
the 6,200,000 Series A preferred shares and settlement of the dividend liability
of  $1,371,475  in  accordance  with the terms of the Series A  preferred  stock
described below.

On March 15, 2003 the holders of 2,510,000  Series B preferred shares elected to
convert  their  shares  to  common  stock.  As a  result  cumulative  undeclared
dividends totaling $995,550 became payable on March 15, 2003.  Accordingly,  the
Company issued 15,004 post reverse-split  shares of common stock in exchange for
the 2,510,000 Series B preferred shares and settlement of the dividend liability
of  $995,550  in  accordance  with the  terms of the  Series B  preferred  stock
described below.

In October 2003 the Company issued 30,000 common shares in settlement of $11,100
of accounts payable.

On November 19, 2003 the Company issued  9,000,000  restricted  common shares to
the shareholders of Lexington for a 100% interest in Lexington.

LRI STOCK OPTION TRANSACTIONS DURING THE YEAR ENDED DECEMBER 31, 2003:
On November 18, 2003, the Company granted  3,000,000  common stock options under
the  Company's  Stock  Option  Plan to  consultants  to the  Company,  including
2,850,000 to  International  Market Trend AG ("IMT")  and/or its  designates.  A
consulting expense of $1,997,581 was recorded representing the fair value of the
3,000,000 options.  The fair value was estimated using the Black-Scholes  option
pricing model assuming an expected live of 5 years, a risk free interest rate of
3%, a dividend yield of 0%, and an expected volatility of 251%.

During November 2003, the Company issued 1,650,000 shares of common stock on the
exercise of stock options at $0.167 per share for proceeds of $275,000 which was
paid by way of offset of  $234,435  originally  advanced  to the  Company by ICI
which  was  assigned  by ICI to  IMT  designated  option  holders,  and  $40,565
originally advanced to the Company by an IMT designated option holder. (Refer to
Note 7.)

On November 21, 2003 the Company registered 1,000,000 common stock options under
an S-8.

LRI's  changes in capital  stock  prior to and in  connection  with the  reverse
acquisition were as follows:

<TABLE>
<CAPTION>

                                                                                       Additional
                                            Common Stock           Preferred Stock       Paid-in
                                             Number   Amount      Number     Amount      Capital      Deficit         Total
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------
<S>                                        <C>       <C>         <C>         <C>      <C>          <C>            <C>

Balance December 31, 2002,
As previously reported by LRI              257,135   $ 19,284    8,710,000   $ 8,710  $10,298,039  $(12,822,928)  $(2,496,895)
20% cumulative dividends payable on
Conversion of Series A Preferred                 -          -            -         -            -    (1,371,475)   (1,371,475)
stock
Expiry of Series A Preferred stock
  Share Purchase Warrant                         -          -            -         -       60,000             -        60,000
Issuance of common stock in
settlement
  of Cumulative dividend on converted
  Series A Preferred stock                  18,286      1,371            -         -    1,370,104             -     1,371,475
Issuance of common stock pursuant to
  Conversion of Series A Preferred          20,667      1,550   (6,200,000)   (6,200)       4,650             -             -
stock
20% cumulative dividends payable on
  Conversion of Series B Preferred               -          -            -         -            -      (995,550)     (995,550)
stock
Issuance of common stock in
settlement
  of Cumulative dividend on converted
  Series B Preferred stock                   6,637        498            -         -      995,052             -       995,550
Issuance of common stock pursuant to
  Conversion of Series B Preferred           8,367        628   (2,510,000)   (2,510)       1,882             -             -
stock
Issuance of common stock in
settlement
  of debt                                  210,092     15,752            -         -    1,244,277             -     1,260,027
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------
Balance post 300:1 reverse stock           521,184   $ 39,081            -   $     -  $13,974,004  $(15,189,953) $(11,768,868)
split
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------

</TABLE>


                                      F-13


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 6:  STOCKHOLDERS' EQUITY (CONT'D)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                       Additional
                                            Common Stock           Preferred Stock       Paid-in
                                             Number   Amount      Number     Amount      Capital      Deficit         Total
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------
<S>                                        <C>       <C>         <C>         <C>      <C>          <C>            <C>

Balance carried forward                    521,184   $ 39,081            -   $     -  $13,974,004  $(15,189,953) $(11,768,868)
Debt settlement                             10,000          2            -         -       11,098             -        11,100
LRI net loss for the period from
January 1, 2003 to November 19, 2003             -          -            -         -            -      (265,201)     (265,201)
Fair value of stock options granted
Concurrent with reverse acquisition              -          -            -         -    1,997,581    (1,997,581)            -
Issued to effect reverse acquisition     3,000,000        750            -         -         (750)                          -
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------

November 19, 2003 pre 3:1 split          3,531,184     39,833            -         -   15,981,933   (17,452,735)   (1,430,969)
3 to 1 forward split                     7,062,368          -            -         -            -             -             -
                                       ------------- ---------- ----------- ---------- ------------ ------------- -----------
LRI balance November 19, 2003           10,593,552   $ 39,833            -   $     -  $15,981,933  $(17,452,735) $ (1,430,969)
                                       ============= ========== =========== ========== ============ ============= ===========

</TABLE>


LRI CAPITAL STOCK TRANSACTIONS POST NOVEMBER 19, 2003:
In November 2003, 1,650,000 stock options were exercised for $275,000, which was
offset against advances payable as described above.

In November 2003,  $250,000 of the advances due to ICI were settled with 100,000
shares of common stock.

In November  2003,  as part of a 3,000,000  unit  offering,  the Company  issued
300,000  units  comprised of one  restricted  share of common stock and one-half
share purchase warrant exercisable at $1.67 for total proceeds of $250,000.  The
fair value of the  warrants  is  estimated  to be $12,500  and is  recorded as a
separate  component of stockholders'  equity. The share purchase warrants expire
on December 31, 2004.


NOTE 7:  EMPLOYEE STOCK OPTION PLAN
--------------------------------------------------------------------------------

Concurrent  with the  acquisition of Lexington,  all prior stock option plans of
LRI were cancelled. By Directors' Resolution dated November 19, 2003 the Company
adopted a Stock Option Plan ("SOP"). The SOP provides authority for the Board to
grant  Options,  for the purchase of a total  number of shares of the  Company's
common  stock,  not to exceed  3,000,000  shares.  The option  period of options
granted  under the SOP shall be up to 10 years  and the  option  price per share
shall be no less than the fair  market  value of a share of common  stock on the
date of grant of the stock option.

A summary of the Company's  stock  options as of December 31, 2003,  and changes
during the period ended is presented below:

                                                    December 31, 2003
                                              -----------------------------
                                                                Weighted
                                                Number of        average
                                                 options     exercise price
     Outstanding at beginning of period                  -          $     -
     Granted November 19, 2003                   3,000,000       0.167/share
     Exercised November 24, 2003                (1,650,000)    (0.167)/share
                                              -------------- --------------

     Exercisable at end of period                1,350,000      $0.167/share
                                              ============== ==============

In January 2004,  1,200,000 stock options were exercised at $0.167 per share for
proceeds  of  $200,000  which was paid by way of offset of  $200,000  originally
advanced  to the  Company  by ICI which was  assigned  by ICI to IMT  designated
option holders.



                                      F-14


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 7:  EMPLOYEE STOCK OPTION PLAN (CONT'D)
--------------------------------------------------------------------------------

On December 31, 2003,  the terms of the Company's SOP were altered,  whereby the
authorized  total number of options was increased from 1,000,000 to 4,000,000 in
anticipation of the Company's  January 26, 2004 3 for 1 forward stock split. The
number of shares  authorized under the SOP is not otherwise  altered as a result
of the Company's forward and reverse stock splits.

On February 2, 2004, an additional 1,000,000 share options were granted; 500,000
exercisable at $1.00 and 500,000 exercisable at $3.00. The term of these options
is five years.


NOTE 8:  RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------

LRI RELATED PARTY TRANSACTIONS DURING THE PERIOD JANUARY 1, 2003 TO NOVEMBER 19,
2003:
The Company,  on January 1, 1999,  entered into a management  services agreement
with  Investor  Communications,  Inc.  ("ICI")  to  provide  management  of  the
day-to-day  operations  of the  Company  for a two  year  term.  The  management
services  agreement requires monthly payments not to exceed $75,000 for services
rendered.  The  Company's  currently  inactive  subsidiary,  International  Gold
Corporation,  entered into a similar  agreement on January 1, 1999 with Amerocan
Marketing,  Inc.  ("Amerocan")  with  required  monthly  payments  not to exceed
$25,000 for services rendered for a two year term. Both agreements were extended
for a further two year term to January 1, 2003.  Subsequent  to January 1, 2003,
the Agreements with ICI and Amerocan expired and were not renewed.

On November  10,  2003,  the Company and  International  Market Trend AG ("IMT")
entered  into  a  financial   consulting  services  agreement  (the  "Consulting
Agreement")  for a period of one year.  Pursuant to the terms and  provisions of
the Consulting Agreement: (i) IMT shall provide financial and general managerial
and business  development  services to the Company; and (ii) the Company granted
to IMT  and/or  its  designees  or  employees,  2,850,000  stock  options at the
exercise price of $0.167 per share.

An officer and director of the Company has been contracted by ICI as part of the
management  team provided to the Company and its  subsidiary.  During the period
ended November 19, 2003 a total of $110,000 (2002 - $96,900) was incurred to ICI
which is also a significant  shareholder,  for  managerial,  administrative  and
investor relations  services provided to the Company and its subsidiary.  During
the period ended  November 19, 2003 ICI paid a total of $25,875 (2002 - $12,325)
to this  officer  and  director  for  services  provided  to the Company and its
subsidiary. ICI also paid the Chief Financial Officer of the Company $13,750 for
his  services for the period ended  November 19, 2003.  In addition,  during the
period ended  November 19, 2003,  ICI and other  shareholders  paid  expenses on
behalf of the Company  totaling  $47,000  (2002 - $24,592).  As of November  19,
2003,  the  Company  owed ICI a total of  $672,805  in accrued  management  fees
payable, loans of $356,998 and interest of $282,477 accrued on outstanding loans
and management fees payable, for a total of $1,312,280 (2002 - $1,044,247).

During the period ended  November  19, 2003 the Company  settled  $1,260,027  in
loans,  notes and accrued  interest  due to related  parties in exchange for the
issuance of 630,276 shares of the Company's common stock.

LRI RELATED PARTY TRANSACTIONS NOVEMBER 20, 2003 THROUGH DECEMBER 31, 2003:
An officer and director of the Company has been contracted by ICI as part of the
management  team provided to the Company and its  subsidiary.  During the period
November 19, 2003  through  December 31, 2003 a total of $10,000 was incurred to
ICI, a significant  shareholder,  for  managerial,  administrative  and investor
relations  services  provided to the Company and its subsidiary.  As of December
31, 2003 the Company  owed ICI a total of $448,370 in  management  fees  payable
which have  accrued as  described  above,  loans of  $59,498,  and  interest  of
$282,477  accrued at 10% per annum on  outstanding  loans and unpaid  management
fees payable, for a total of $790,345. (Refer to Note 11)

A private  company  owned by a director of the  Company  has been  assigned a 5%
carried  Working  Interest  in each well to be drilled on the Wagnon  lease,  as
partial  compensation  for his  involvement  in obtaining and  facilitating  the
execution of the Farm-Out  Agreement and to compensate his services  relating to
operation  and  completion  of wells  to be  located  on the  Wagnon  Lease.  In
addition,  after all capital costs relating to drilling on wells relating to the
Wagnon Lease are repaid to the private  Funding  Investors,  the director of the
Company will  back-in to a further  reversionary  5.0% Working  Interest in each
well to be located on the Wagnon Lease.  After well drilling  capital is repaid,
the director will have a total 10.0% Working Interest in each well to be located
on the Wagnon Lease. (Refer to Notes 4 and 5.)


                                      F-15


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 9:  INCOME TAXES
--------------------------------------------------------------------------------

The Company has adopted FASB No. 109 for reporting purposes.  As of December 31,
2003, the Company had net operating loss carry forwards that may be available to
reduce future  years'  taxable  income and will expire  between the years 2006 -
2023.  Availability of loss usage is subject to change of ownership  limitations
under Internal Revenue Code 382. Future tax benefits which may arise as a result
of these losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and  accordingly,  the Company has
recorded a valuation  allowance for the deferred tax asset relating to these tax
loss carryforwards.


NOTE 10 - SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
--------------------------------------------------------------------------------

                                                    Period ended December
                                                           31, 2003
       ------------------------------------------------------------------
       Cash paid during the period for:
                Interest                                 $     -
                Income taxes                             $     -
       ------------------------------------------------------------------


During the period  November  19,  2003  through  December  31,  2003 the Company
settled  $250,000 of advances due to ICI for 300,000 shares of common stock. The
Company also issued  1,650,000 common shares on the exercise of stock options at
$0.167 per share for the offset of prior advances (refer to Note 6).


NOTE 11: SUBSEQUENT EVENTS
--------------------------------------------------------------------------------

During  January,  2004,  the  parties to the Share  Exchange  Agreement,  Orient
Exploration  Ltd.  ("Orient"),  Douglas  Humphreys  ("Humphreys"),  the Company,
Lexington,  and Paluca Petroleum Inc.  ("Paluca")  re-evaluated the terms of the
original  Share  Exchange  Agreement  and upon further  negotiations  desired to
modify the terms of the original  agreement in the best  interest of all parties
such that: (i) 2,250,000  shares of restricted  Common Stock of the Company held
of record by Humphreys were  transferred to Orient in  consideration  therefore;
(ii) the Company  assigned to Humphreys a 5% carried  working  interest in every
well drilled by the Company on the Wagnon Property;  (iii) the Company agreed to
allow Humphreys to participate up to an additional 5% working  interest in every
well drilled by the Company on the Wagnon  Property;  (iv) the Company agreed to
transfer to Paluca  certain  assets  previously  acquired by the Company  (which
included  working  interests  and net revenue  interests  in certain oil and gas
leases  located on the Doc Cole Property,  the Atwood Booch Sand  Property,  the
Jeneva Property and the Sasakwa Gilcrease Sand Property).

Management  of the Company  does not intend to proceed with the  acquisition  or
development  of  the  described  properties  as  set  out in  item  (iv)  due to
management's analysis that the properties do not contain the appropriate oil and
gas  development  elements  that form part of the  Company's  current  focus and
criteria for corporate oil and gas development initiatives.

In  order  to  reflect  the  revised   operating   arrangement   resulting  from
modifications  to  the  original  terms  of the  Share  Exchange  Agreement  the
following two agreements were simultaneously executed:

HUMPHREYS/ORIENT AGREEMENT
On January 21,  2004,  Orient and Douglas  Humphreys,  a director of the Company
("Humphreys")  entered into an  agreement  (the  "Humphreys/Orient  Agreement").
Pursuant  to  the  terms  and  provisions  of  the  Humphreys/Orient  Agreement:
Humphreys agreed to transfer  2,250,000 shares of restricted Common Stock of the
Company held of record by Humphreys to Orient in consideration therefore.


                                      F-16


<PAGE>


LEXINGTON RESOURCES, INC. (FORMERLY INTERGOLD CORPORATION)
(an exploration stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003
--------------------------------------------------------------------------------
NOTE 11: SUBSEQUENT EVENTS (CONT'D)
--------------------------------------------------------------------------------

PALUCA AGREEMENT
On January 21, 2004, the Company, Lexington.  ("Paluca Petroleum Inc. ("Paluca")
and Humphreys  entered into an agreement  whereby:  (i) the Company  assigned to
Humphreys a 5% carried working  interest in every well drilled by the Company on
the Wagnon  Property;  (ii) the Company agreed to allow Humphreys to participate
up to an additional 5% working  interest in every well drilled by the Company on
the Wagnon  Property;  (iii) Humphreys agreed to waive any and all other claims,
debts or obligations owed to Humphreys by the Company or by Lexington,  and (iv)
the Company agreed to transfer to Paluca certain assets  previously  acquired by
the Company  (which  included  working  interests  and net revenue  interests in
certain oil and gas leases  located on the Doc Cole  Property,  the Atwood Booch
Sand Property, the Jeneva Property and the Sasakwa Gilcrease Sand Property.

WAGNON FARM OUT
Lexington completed the drilling of the Kellster 1-5 well on its Wagnon farm-out
prospect in February 2004. The well is currently in production.

COAL CREEK PROJECT
In March 2004 the  Company  obtained  an option to  purchase  an  undivided  95%
interest in  approximately  2,500 net leasehold  acres in 5 sections of the Coal
Creek  Prospect  located  in  Hughes  and  Pittsburg  Counties,  in the State of
Oklahoma.  The option to purchase is valid until  approximately  April 11, 2004.
The  Company  paid a deposit of $50,000  towards the option in March 2004 and in
order to earn the option must pay a further acreage fee up to $637,500.

STOCK AND STOCK  OPTION  TRANSACTIONS  SUBSEQUENT  TO DECEMBER 31, 2003 Refer to
Notes 6 and 7.


                                      F-17


<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         The Company's principal  independent  accountant from August 9, 2000 to
the current date is Labonte & Co.,  #610 - 938 Howe Street,  Vancouver,  British
Columbia  V6Z 1N9.  Effective  January 1, 2004,  LaBonte & Co.  merged with Dale
Matheson  Carr-Hilton  Chartered  Accountants  pursuant to which the name of the
Company's principal independent  accountant changed to Dale Matheson Carr-Hilton
LaBonte  ("DMCL").  DMCL's  address  will  remain  at  #610 - 938  Howe  Street,
Vancouver,  British Columbia until approximately mid-summer of 2004. Thereafter,
DMCL's  address  will be 1140 West  Pender  St.,  Vancouver,  British  Columbia,
Canada.


ITEM 8A. CONTROLS AND PROCEDURES

         An  evaluation  was  conducted  under  the  supervision  and  with  the
participation of the Company's management, including Grant Atkins, the Company's
Chief Executive Officer ("CEO") and Vaughn Barbon, the Company's Chief Financial
Officer  ("CFO"),  of the  effectiveness  of the  design  and  operation  of the
Company's  disclosure  controls and procedures as of December 31, 2003. Based on
that  evaluation,  Mr.  Atkins  and Mr.  Barbon  concluded  that  the  Company's
disclosure controls and procedures were effective as of such date to ensure that
information  required to be  disclosed  in the reports  that it files or submits
under the Exchange Act, is recorded,  processed,  summarized and reported within
the time periods  specified in SEC rules and forms.  Such  officers also confirm
that  there was no change  in the  Company's  internal  control  over  financial
reporting during the year ended December 31, 2003 that has materially  affected,
or is reasonably  likely to materially  affect,  the Company's  internal control
over financial reporting.


PART III

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

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

     On December 31, 2003, the Board of Directors appointed additional directors
as  required  to  fulfill  development  roles  with  the  Company  and  for  the
establishment of the audit committee.  To be effective April 30, 2004, Mr. Steve
Jewett and Mr. Norman MacKinnon will be appointed to the Board of Directors.  As
of the date of this Annual Report,  the directors and executive  officers of the
Company are Mr. Grant Atkins,  President/Chief Executive Officer and a director,
Mr. Vaughn Barbon,  Treasurer/Chief  Financial Officer, and Douglas Humphreys, a
director.  As of April 30, 2004,  the directors  and  executive  officers of the
Company will be as follows:

<PAGE>


Name                      Age               Position with the Company
----                      ---               -------------------------

Grant R. Atkins           43                President/Chief Executive Officer
                                            and Director

Vaughn Barbon             47                Treasurer/Chief Financial Officer

Douglas Humphreys         51                Director

Norman MacKinnon          68                Director

Steve Jewett              65                Director

         BIOGRAPHIES OF EXECUTIVE OFFICERS AND DIRECTORS

         GRANT  ATKINS  has been the  President/Chief  Executive  Officer of the
Company  since 2001 and a director  of the Company  since  September  1998.  Mr.
Atkins has provided an organization and administrative role in the Company since
its formation. For the past ten years, Mr. Atkins has been self-employed and has
acted  as  a  financial  and  project  coordination  consultant  to  clients  in
government and private industry. He has extensive  multi-industry  experience in
the fields of finance,  administration and business development. During 1998 and
through the current date, Mr. Atkins has provided  consulting  services  through
Investor Communications International,  Inc. Mr. Atkins is a member of the board
of directors  of GeneMax  Corp.,  a publicly  traded  biotechnology  corporation
specializing in the discovery and development of immunotherapeutics aimed at the
treatment  and  eradication  of cancer and therapies  for  infectious  diseases,
autoimmune disorders and transplant tissue rejection.

         VAUGHN BARBON is the Treasurer/Chief  Financial Officer of the Company.
Mr.  Barbon has been active in the  financial  arena of both  private and public
companies for over 22 years. He has been responsible for the  implementation and
control of accounting procedures for a number of companies.  Mr. Barbon attended
the University of Victoria  majoring in Political  Science and Economics.  After
attending the University, he immediately began working for international banking
institutions,  holding various  positions  including bank auditor and the branch
manager  of a  large  commercial  banking  unit.  He  has  a  strong  accounting
background  completing  numerous financial and business evaluation programs at a
number of extended learning institutions,  including City University. Mr. Barbon
brings a strong background in financial accounting for public companies.

         DOUGLAS  HUMPHREYS  is a director of the  Company and was the  managing
director of  Lexington  Oil & Gas Ltd.  Co., and also serves as president of Oak
Hills  Energy,  Inc., an oil and gas  operating  company  based in  Holdenville,
Oklahoma that acts as "operator" to Lexington. Mr. Humphreys is in charge of all
oil and gas  operations.  As managing  director of Lexington Oil & Gas Ltd. Co.,
Mr.  Humphreys  brings a wealth  of  experience  in the oil and gas  development
business.  He has been active in the industry  for over 30 years,  mostly in his
home  state  of  Oklahoma  and in  surrounding  oil and gas  rich  regions.  His
knowledge  of the  business  comes  from  hands-on  experience  helping to build
several oil and gas  producing  companies  to  prominence,  as well as playing a
personal role in the development of over 1,100 wells.

         Mr. Humphreys began his career with the Tide West Oil Company, which he
helped to found.  Tide West Oil Company focused on exploration and production in
the  min-continent  U.S. region and became a notable  participant and was one of

<PAGE>

the largest  operators in the Austin Chalk Play in South  Texas.  By 1992,  Tide
West Oil was  recognized as the seventh  fastest  growing oil and gas company in
the United  States as ranked by The Oil & Gas  Journal.  During his tenure  with
Tide West Oil Company,  Mr.  Humphreys  acted as production  superintendent  and
later as  operations  manager.  He  gained a  thorough  understanding  of a wide
variety of oil and gas  operations and was directly  responsible  for overseeing
drilling  projects  from very shallow to deep wells of over 21,000 feet in depth
He also led the company's  efforts in implementing  horizontal  drilling as that
new technology emerged in the 1980's. Tide West Oil also operated two subsidiary
companies,  Square D Drilling and TWT Trucking, in order to better control costs
and increase the  profitability  of its core business of oil and gas production.
Mr.  Humphreys  assumed the role of vice president of both of these  businesses,
which  eventually  gave Tide West Oil the  ability to act as a fully  integrated
operator.  Success  in the  Texas  and  Oklahoma  regions  made  Tide West Oil a
desirable  takeover  target and in 1996, HS Resources  approached  Tide West Oil
Company. HS Resources was seeking to grow its operating base and bolster assets,
which at that time positioned the company in the top 30 largest publicly, traded
oil companies.  Tide West Oil was sold to HS Resources in a deal that valued the
company at over $200 million,  based on the established operations that included
549 wells in 5 states. Mr. Humphreys stayed with HS Resources and became manager
of  mid-continent  operations.  His primary role was to oversee  exploration and
production on the properties in the mind continent region.

         Mr.  Humphreys  has a  comprehensive  network  of oil and gas  industry
contacts that compliment his corporate development skills. He is truly a veteran
oilman  with a proven  ability  to bring  oil and gas  assets  from  acquisition
through  to  production.  He is an active  member of the  Holdenville,  Oklahoma
community  where  he  resides  and is a  well-known  figure  within  oil and gas
circles.   Mr.  Humphreys  graduated  in  1975  from  Southwest  Oklahoma  State
University with a degree in Business Administration and Geology.

         NORMAN J.R. MACKINNON will be a director of the Company effective April
30, 2004. Mr. MacKinnon  articled with Peat,  Marwick,  Mitchell (now KPMG), and
qualified as a Chartered Accountant in 1961. From 1962 to1964, Mr. MacKinnon was
Audit manager with Griffiths & Griffiths. In 1965, Mr. MacKinnon started his own
accounting  practice.  From 1968 to 1972,  Mr.  MacKinnon  was president & chief
executive officer of Imaginaction International Ltd., a venture capital company,
involved with start-ups and  acquisitions.  From 1972 to1984,  Mr. MacKinnon was
Senior  Partner,  specializing  in  taxation,  for the public  practice  firm of
MacKinnon, Sapera, Lewis & McDonald. From 1972 to the present, Mr. MacKinnon has
served on the Board of  numerous  public  companies,  assisting  in the  finance
function.  He has also been  involved  in the  development  of  several  private
companies.  Mr.  MacKinnon has acted in many Public Service roles throughout his
career,  including  serving  on  various  committees  of the B.C.  Institute  of
Chartered  Accountants,  serving  on the  board of the  Borstal  Association  of
British  Columbia,  of which he was made a life member,  serving on the board of
the Greater  Vancouver Crime Stoppers for 7 years and was director for a term on
the United Community Services Board.

         STEVE  JEWETT  will be a director of the  Company  effective  April 30,
2004. Mr. Jewett received his Chartered Accountant designation in 1964 and spent
several  years in  industry  as a  Treasurer  and  Controller  of  companies  in
Vancouver,  British  Columbia as well as in New York and San Francisco.  In 1973
Mr. Jewett returned to Vancouver to enter public practice and was a partner in a
Chartered Accountancy practice,  Clark & Company,  until 1978. He then organized
his own  practice,  as a sole  practitioner,  which has  continued  through  the
current  date.  During  his  career,  Mr.  Jewett  was  auditor  of many  public

<PAGE>

companies.  He  now  restricts  his  practice  to  compilation  and  income  tax
engagements.  Mr. Jewett is a member in good standing of The Canadian  Institute
of Chartered  Accountants and the Institute of Chartered  Accountants of British
Columbia.


INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

         As of the date of this Annual Report,  no director or executive officer
of the Company is or has been involved in any legal  proceeding  concerning  (i)
any  bankruptcy  petition  filed by or against any business of which such person
was a general partner or executive  officer either at the time of the bankruptcy
or within  two years  prior to that  time;  (ii) any  conviction  in a  criminal
proceeding or being subject to a pending criminal proceeding  (excluding traffic
violations  and other minor  offenses)  within the past five years;  (iii) being
subject to any order,  judgment or decree permanently or temporarily  enjoining,
barring,  suspending or otherwise limiting  involvement in any type of business,
securities or banking  activity;  or (iv) being found by a court, the Securities
and Exchange  Commission or the  Commodity  Futures  Trading  Commission to have
violated a federal or state  securities or commodities law (and the judgment has
not been reversed, suspended or vacated).

COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE

         As of the date of this Annual Report, the Company has appointed Messrs.
Jewett and MacKinnon as members to the audit committee to be effective April 30,
2004.  Each  member of the audit  committee  will be  "independent"  within  the
meaning of Rule 10A-3 under the Securities Exchange Act of 1934, as amended. The
audit  committee  will be organized  effective  April 30, 2004, and will operate
under a written charter adopted by the Board of Directors on February 2, 2004. A
copy of the audit committee charter is attached to this Annual Report as exhibit
10.22.

         Previously,  the  respective  role  of  an  audit  committee  has  been
conducted by the Board of Directors of the Company. When established,  the audit
committee's  primary  function  will be to provide  advice  with  respect to the
Company's  financial  matters and to assist the Board of Directors in fulfilling
its  oversight  responsibilities   regarding  finance,   accounting,  and  legal
compliance.  The audit committee's primary duties and  responsibilities  will be
to: (i) serve as an  independent  and  objective  party to monitor the Company's
financial  reporting  process  and  internal  control  system;  (ii)  review and
appraise  the audit  efforts of the  Company's  independent  accountants;  (iii)
evaluate the Company's quarterly financial performance as well as its compliance
with  laws  and  regulations;   (iv)  oversee  management's   establishment  and
enforcement  of financial  policies and business  practices;  and (v) provide an
open avenue of communication among the independent  accountants,  management and
the Board of Directors.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section 16(a) of the Exchange Act requires the Company's  directors and
officers,  and the  persons  who  beneficially  own more than ten percent of the
common  stock of the  Company,  to file  reports  of  ownership  and  changes in
ownership  with the  Securities  and  Exchange  Commission.  Copies of all filed
reports are  required  to be  furnished  to the  Company  pursuant to Rule 16a-3

<PAGE>

promulgated  under the Exchange Act. Based solely on the reports received by the
Company  and on  the  representations  of the  reporting  persons,  the  Company
believes  that  these  persons  have   complied  with  all   applicable   filing
requirements during the fiscal year ended December 31, 2003.

CODE OF ETHICS

         At this time,  the Company has not adopted a formal Code of Ethics that
applies to the Chief Executive Officer and Chief Financial Officer.  The Company
expects to adopt a formal Code of Ethics during the current fiscal year.


ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS AND DIRECTORS

         As of the date of this Annual Report, none of the directors or officers
of the  Company  are  compensated  for their  roles as  directors  or  executive
officers.  Officers  and  directors  of the  Company may be  reimbursed  for any
out-of-pocket  expenses  incurred by them on behalf of the Company.  The Company
presently has no pension, health, annuity,  insurance, profit sharing or similar
benefit plans. Mr. Atkins and Mr. Barbon  previously  derived  remuneration from
the Company directly and through  Investor  Communications  International,  Inc.
("ICI"), which provided a wide range of management, financial and administrative
services to the Company. See "Summary Compensation Table" below.

         Executive  compensation  is  subject  to  change  concurrent  with  the
Company's  requirements.  None of the officers and  directors of the Company are
officers or directors of ICI, nor does the Company own of record  capital  stock
of ICI.

SUMMARY COMPENSATION TABLE

                               Annual Compensation        Awards   Payouts
                              ---------------------      --------  -------
                                 $      $       $       $     #      $
Name/Position     Year       Salary  Bonus   Other     RSA Options  LTIP   Other
-------------     ----       ------  -----   -----     --- ------- ------  -----
                                                  (1)
Grant Atkins      2000          0      0    $57,500     0     0       0      0
Pres./Director    2001          0      0     12,500     0     0       0      0
                  2002          0      0      3,300     0     0       0      0
                  2003          0      0     19,625     0     0   100,000    0

                                                  (1)
Vaughn Barbon     2003          0      0    $15,000     0     0       0      0
CFO
--------------------------------------------------------------------------------
 (1)
  Received pursuant to respective  contractual  arrangements between the Company
and ICI.

<PAGE>

STOCK OPTION PLAN

         Of the  4,000,000  (post-Forward  Stock Split) Stock  Options  granted,
2,850,000  (post-Forward  Stock Split) Stock  Options have been  exercised.  The
table  below  reflects  the  Stock  Options  originally  granted  to  directors,
executive  officers,  affiliates or shareholders  holding greater than 5% of the
equity in the Company, and the respective percentage of Stock Options granted to
such  person in relation  to the  aggregate  total of  4,000,000  Stock  Options
granted (without taking into consideration the exercise of any Stock Options.)

<PAGE>
<TABLE>
<CAPTION>

         OPTIONS/SAR GRANTS TABLE
--------------------------------------------------------------------------------
Name               Number of    Percent of Total   Exercise Price      Date of
                  Securities    Options Granted                      Expiration
                  Underlying
                    Options
--------------------------------------------------------------------------------

<S>                 <C>             <C>                <C>            <C>
                          (2)
D. Humphreys       150,000          2.50%              $0.50          02/12/2013

                          (1)(2)
International    2,850,000                             $0.50          02/12/2013
 Market Trend AG   495,000                              1.00          12/31/2008
                   400,000         92.25%               3.00          12/31/2008

Norman MacKinnon     2,500          0.01%              $1.00          12/31/2008

Stephen Jewett       2,500          0.01%              $1.00          12/31/2008

Grant Atkins       100,000          5.00%              $3.00          12/31/2008

Total            2,000,000        100.00%
--------------------------------------------------------------------------------
</TABLE>

         (1) The Company granted to IMT and/or its employees/designates  950,000
(pre Forward Stock Split) Stock  Options  (which such Stock Options were subject
to an  S-8  registration  statement  filed  with  the  Securities  and  Exchange
Commission on November 21, 2003).

         (2) The 150,000 Stock Options and the 2,850,000  Stock Options  granted
to Mr. Humphreys and IMT,  respectively,  reflect the Forward Stock Split. Stock
Options  originally  granted to Mr.  Humphreys  and IMT were 50,000 and 950,000,
respectively.

         AGGREGATED OPTIONS/SAR EXERCISES
--------------------------------------------------------------------------------
Name   Shares Acquired  Value Realized   Number of Securities      Value of
        On Exercise                     Underlying Unexercised  Unexercised in-
                                                Options        the-money Options
--------------------------------------------------------------------------------
                   (1)
IMT       2,850,000        $475,000              -0-                 -0-

--------------------------------------------------------------------------------
         (1) Pursuant to certain  notice and  agreements of exercise of options,
certain employees or consultants of IMT exercised 2,606,610 (868,870 pre-Forward
Stock Split) Stock Options at the exercise price of $0.50 per share for $434,435
in settlement  and  assignment  of debt and 243,390  (81,130  pre-Forward  Stock
Split)  Stock  Options at the  exercise  price of $0.50 per share for  aggregate
proceeds of $40,565 to acquire 243,390 (81,130  pre-Forward  Stock Split) shares
of the Common Stock of the company.

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the name and address,  as of the date of
this Annual Report,  and the approximate number of shares of Common Stock of the
Company owned of record or beneficially  by each person who owned of record,  or
was known by the Company to own beneficially, more than five percent (5%) of the
Company's  Common  Stock,  and the name and  shareholdings  of each  officer and
director,  and all  officers  and  directors  as a group  as of the date of this
Annual Report.

         As of the date of this Annual Report,  there are  14,043,552  shares of
Common Stock issued and outstanding.
--------------------------------------------------------------------------------
Title of Class        Name and Address         Amount and Nature     Percent of
                    of Beneficial Owner       of Beneficial Owner     of Class
--------------------------------------------------------------------------------
                                                             (2)
Common Stock         Douglas Humphreys                150,000            17.84%
                     7545 Highway 270
                     Holdenville, Oklahoma
                     74848

                                                             (1)(3)
Common Stock         Orient Explorations Ltd.       3,000,000            21.36%
                     P.O. Box 97 Leeward
                     Highway, Provinciales
                     Turks & Caicos Islands

                                                             (4)
Common Stock         Grant Atkins                     100,000             0.71%
                     435 Martin Street
                     Suite 2000
                     Blaine, Washington 98230

Common Stock         Vaughn Barbon                        -0-                0%
                     435 Martin Street
                     Suite 2000
                     Blaine, Washington 98230

                                                             (5)
Common Stock         Steve Jewett                       2,500              .02%
                     435 Martin Street
                     Suite 2000
                     Blaine, Washington 98230

                                                             (6)
Common Stock         Norman MacKinnon                   2,500              .02%
                     628 - 470 Granville Street
                     Vancouver, British Columbia
                     Canada V6C 1V5

<PAGE>

                                                             (7)
Common Stock        All officers and directors        255,000             1.1.%
                    as a group (5 persons)
------------------------------------------------------------------
         (1) These are restricted shares of Common Stock.

         (2) This figure includes the assumption of the exercise of an aggregate
of 150,000  post-Forward  Stock Split  (50,000  pre-Forward  Stock  Split) Stock
Options  into  150,000  shares  of  Common  Stock at the rate of $0.50 per share
expiring  February 12, 2013. As of the date of this Annual  Report,  none of the
Stock Options have been exercised.

         (3) The sole shareholder of Orient  Explorations  Ltd. is Meridan Trust
with an office  at 1  Carribean  Plaza,  Provinciales,  Turks & Caicos  Islands,
British West Indies.  The sole director of Orient  Explorations Ltd. is Cockburn
Directors  Ltd. Harry Dempsey,  with an office at Cockburn  House,  P.O. Box 70,
Market Street,  Cockburn Town, Grand Turks, Turks & Caicos Islands.  Mr. Dempsey
has the sole exclusive voting and disposition  rights regarding shares of Common
Stock.

         (4) This figure includes the assumption of the exercise of an aggregate
of 100,000  Stock  Options  into  100,000  shares of Common Stock at the rate of
$3.00  per share  expiring  December  31,  2008.  As of the date of this  Annual
Report, no Stock Options have been exercised.

         (5) Mr.  Jewett's  appointment  as a director  of the  Company  will be
effective  as of April 30, 2004.  This figure  includes  the  assumption  of the
exercise of an  aggregate  of 2,500 Stock  Options  into 2,500  shares of Common
Stock at the rate of $1.00 per share expiring  December 31, 2008. As of the date
of this Annual Report, no Stock Options have been exercised.

         (6) Mr.  MacKinnon's  appointment  as a director of the Company will be
effective  as of April 30, 2004.  This figure  includes  the  assumption  of the
exercise of an  aggregate  of 2,500 Stock  Options  into 2,500  shares of Common
Stock at the rate of $1.00 per share expiring  December 31, 2008. As of the date
of this Annual Report, no Stock Options have been exercised.

         (7) This figure includes the assumption of the exercise of an aggregate
of 255,000 Stock Options into 255,000 shares of Common Stock.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONSULTING AGREEMENT

         On November  10,  2003,  Lexington  and  International  Market Trend AG
("IMT") entered into a financial  consulting services agreement (the "Consulting
Agreement")  for a period of two years.  Pursuant to the terms and provisions of
the  Consulting  Agreement:   (i)  IMT  shall  provide  financial  and  business
development  services to the Company;  and (ii) Lexington granted to IMT 950,000
stock options at the exercise price of $0.50 per share.

CONSULTING SERVICES AGREEMENT

         On January 1, 1999,  the Company and ICI  entered  into the  Consulting
Services  Agreement  for a period of two years,  which was renewed on January 1,
2001 for an  additional  two year term.  Subsequent  to  January  1,  2003,  the
Consulting  Services  Agreement  has been  renewed  on a  month-to-month  basis.

<PAGE>

Pursuant to the terms and provisions of the Consulting Services  Agreement,  ICI
shall  provide to the Company  such  finance and  managerial  services as may be
determined  by the Board of  Directors,  from time to time,  and in its sole and
absolute  discretion,  in order to develop the various business interests of the
Company.  Pursuant to further terms and  provisions of the  Consulting  Services
Agreement,  ICI shall be paid a monthly fee not to exceed  $75,000 for  services
rendered.

         In connection  therewith,  Grant Atkins, the President/Chief  Executive
Officer/director of the Company,  and Vaughn Barbon, the Chief Financial Officer
of the Company, were employed by ICI and part of the management team provided by
ICI to the Company, and derived remuneration from ICI for such services rendered
to the Company.  During fiscal year ended December 31, 2003, Mr. Atkins was paid
by ICI  approximately  $19,625  and Mr.  Barbon  was  paid by ICI  approximately
$15,000 for services rendered through ICI to the Company.

         The   officers/directors  of  the  Company  may  be  engaged  in  other
businesses,  either  individually or through  partnerships and corporations,  in
which  they may have an  interest,  hold an  office  or serve on the  boards  of
directors.  Certain  conflicts of  interest,  therefore,  may arise  between the
Company and such  officer/director.  Such conflicts can be resolved  through the
exercise by such  officer/director  of judgment  consistent  with his  fiduciary
duties to the Company.  Messrs.  Atkins,  Humphreys and Barbon intend to resolve
any such conflicts in the best interests of the Company.  Moreover, the officers
and  directors of the Company will devote his time to the affairs of the Company
as they deem necessary.

         Notwithstanding the above described contractual  relations,  there were
no other  transactions  or series of  transactions  for the  fiscal  year  ended
December 31, 2003, nor are there any currently proposed transactions,  or series
of the same to which  the  Company  is a party,  in which  the  amount  involved
exceeds  $60,000 and in which,  to the  knowledge of the Company,  any director,
executive officer, nominee, 5% shareholder or any member of the immediate family
of the  foregoing  persons,  have or will  have a direct  or  indirect  material
interest.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 78.7502 of the Nevada Revised Statutes contains  provisions for
indemnification  of the  officers  and  directors  of the  Company.  Nevada  law
provides for  indemnification  (which may eliminate any personal  liability of a
director  to the  Company or its  shareholders  for  monetary  damages for gross
negligence or lack of care in carrying out the director's fiduciary duties) if a
director or officer acts in good faith in a manner reasonably believed to be in,
or not opposed to, the best interests of the Company.  A director or officer may
be indemnified as to any matter in which he successfully defends himself.

         The  officers  and  directors  of the  Company are  accountable  to the
shareholders  of the  Company as  fiduciaries,  which  means such  officers  and
directors  are  required to exercise  good faith and  integrity  in handling the
Company's affairs.

         A  shareholder  may be able to  institute  legal  action  on  behalf of
himself and all other similarly  situated  shareholders to recover damages where
the Company has failed or refused to observe the law.  Shareholders may, subject
to  applicable  rules of civil  procedure,  be able to bring a class  action  or
derivative suit to enforce their rights,  including rights under certain federal
and state securities laws and regulations. Shareholders who have suffered losses
in connection  with the purchase or sale of their interest in the Company due to

<PAGE>

a breach of a  fiduciary  duty by an  officer  or  director  of the  Company  in
connection  with  such sale or  purchase  including,  but not  limited  to,  the
misapplication  by any such officer or director of the proceeds from the sale of
any securities, may be able to recover such losses from the Company.

         Insofar as indemnification for liabilities arising under the Securities
Act may be  permitted to  directors,  officers  and  controlling  persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission  such  indemnification  is against
public  policy  as  expressed  in  the   Securities   Act  and  is,   therefore,
unenforceable.  In the  event  that a claim  for  indemnification  against  such
liabilities  (other than the payment by the Company of expenses incurred or paid
by a director,  officer or  controlling  person of the Company in the successful
defense or any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the securities being  registered,  the
Company  will,  unless in the opinion of its counsel the matter has been settled
by  controlling  precedent,  submit to a court of appropriate  jurisdiction  the
question  whether  such  indemnification  by  it is  against  public  policy  as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.

         The Company has no  agreements  with any of its  directors or executive
officers  providing  for  indemnification  of any such  persons  with respect to
liability arising out of their capacity or status as officers and directors.

         At present,  there is no pending  litigation or proceeding  involving a
director or  executive  officers of the Company as to which  indemnification  is
being sought.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following exhibits are filed as part of this Annual Report.

               10.1 Share Exchange Agreement dated November 19, 2003 and
                    effective February 10, 2003.

               10.2 Stock  Option  Plan  of  Lexington  Resources,   Inc.  dated
                    February 2, 2004.

               10.3 Financial Consulting Services Agreement between Lexington
                    Resources, Inc. and International Market Trend AG dated
                    November 10, 2003.

               10.4 Charter of Audit Committee of Lexington Resources, Inc.

               31.1 Certification  of Chief Executive  Officer  Pursuant to Rule
                    13a-14(a) or 15d-14(a) of the Securities Exchange Act.

               31.2 Certification  of Chief Financial  Officer  Pursuant to Rule
                    13a-14(a) or 15d-14(a) of the Securities Exchange Act.

               32.1 Certification of Chief Executive Officer and Chief Financial
                    Officer  Under  Section 1350 as Adopted  Pursuant to Section
                    906 of the Sarbanes-Oxley Act.
<PAGE>

         (b) Reports on Form 8-K.

               (1)  Report on Form 8-K filed on April 6, 2004.

               (2)  Report on Form 8-K filed March 31, 2003 and amended April 1,
                    2003.

               (3)  Report on Form 8-K filed November 21, 2003.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

         During  fiscal year ended  December  31,  2003,  the  Company  incurred
approximately  $15,000  in  fees to its  principal  independent  accountant  for
professional  services  rendered  in  connection  with  audit  of the  Company's
financial  statements for fiscal year ended December 31, 2003 and for the review
of the Company's  financial  statements  for the quarters  ended March 31, 2003,
June 30, 2003 and September 30, 2003.

         During  fiscal year ended  December  31,  2002,  the  Company  incurred
approximately  $16,065  in  fees to its  principal  independent  accountant  for
professional  services  rendered  in  connection with  audit  of  the  Company's
financial  statements for fiscal year ended December 31, 2002 and for the review
of the Company's  financial  statements  for the quarters  ended March 31, 2002,
June 30, 2002 and September 30, 2002.

         During fiscal year ended  December 31, 2003,  the Company did not incur
any other fees for professional  services rendered by its principal  independent
accountant  for all  other  non-audit  services  which may  include,  but is not
limited to, tax-relates services, actuarial services or valuation services.

<PAGE>

SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          LEXINGTON RESOURCES, INC.


Dated: April 5, 2004                      By: /s/ GRANT ATKINS
                                              ----------------------------------
                                              Grant Atkins, President/Chief
                                              Executive Officer



Dated: April 5 , 2004                     By: /s/ VAUGHN BARBON
                                              ----------------------------------
                                              Vaughn Barbon, Treasurer/Chief
                                              Financial Officer