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

FORM 20-F

[ ]    REGISTRATION STATEMENT PURSUANT TO SECTION
  12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended July 31, 2005 (with other information
to January 21, 2006 except where noted)

OR

[ ]    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 0-27668

TRANS-ORIENT PETROLEUM LTD.(Exact name of
Registrant specified in its charter)

TRANS-ORIENT PETROLEUM LTD.(Translation of Registrant's name into English)

BRITISH COLUMBIA, CANADA(Jurisdiction of
incorporation or organization)

1407-1050 Burrard StreetVancouver, British
Columbia, Canada, V6Z 2S3(Address of principal executive
offices)

COMMON SHARES WITHOUT PAR VALUE(Title of
Class)

Securities registered or to be registered pursuant to Section
12(b) of the Act.

|**Title of Each Class** | **Name of each exchange on which registered**
|----------------------- | ---------------------------------------------
|None                    | Not applicable                               

Securities registered or to be registered pursuant to Section
12(g) of the Act

|**Common Shares without Par Value**
|-----------------------------------
|(Title of Class)                   

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act. None

Number of outstanding shares of Trans-Orients only class
  of capital stock as on July 31, 2005. 
  2,516,869 Common Shares Without Par Value

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- ii -

Indicate by check mark whether Registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange Act
  of 1934during the preceding 12 months (or for such shorter period that
  Registrant was required to file such reports), and (2) has been subject to such
  filing requirements for the past 90 days.

Yes [ **x** ]      No [
  ]

Indicate by check mark which financial statement item Registrant
  has elected to follow:

Item 17 [ **x** ]      Item
  18 [ ]

If this is an annual report, indicate by check mark whether the
  Registrant is a shell company (as defined in Rule 12-b of the exchange act):

Yes [ ]      No [ **x**
  ]

(End of Cover Page)

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|T A B L E   O F   C O N T E N T S                                            
|-----------------------------------------------------------------------------
|of the Form 20F of Trans-Orient Petroleum Ltd. (herein
      theRegistrant)
|                                                                             

|                              |                                                                                        | Page  
|----------------------------- | -------------------------------------------------------------------------------------- | ------
|                              |                                                                                        |       
|PART I                        |                                                                                        | 1     
|                              |                                                                                        |       
|ITEM 1.                       | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                                  | 1     
|                              |                                                                                        |       
|ITEM 2.                       | OFFER STATISTICS AND EXPECTED TIMETABLE                                                | 1     
|                              |                                                                                        |       
|ITEM 3.                       | KEY INFORMATION                                                                        | 1     
|                              |                                                                                        |       
|ITEM 4.                       | INFORMATION ON THE REGISTRANT                                                          | 6     
|                              |                                                                                        |       
|ITEM 5.                       | OPERATING, FINANCIAL REVIEW AND PROSPECTS                                              | 10    
|                              |                                                                                        |       
|ITEM 6.                       | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                             | 15    
|                              |                                                                                       
|BOARD PRACTICES               | 17                                                                                    
|                              |                                                                                        |       
|ITEM 7.                       | MAJOR SHAREHOLDERS AND RELATED TRANSACTIONS                                            | 18    
|                              |                                                                                        |       
|ITEM 8.                       | FINANCIAL INFORMATION                                                                  | 21    
|                              |                                                                                        |       
|ITEM 9.                       | THE OFFER AND LISTING                                                                  | 22    
|                              |                                                                                        |       
|ITEM 10.                      | ADDITIONAL INFORMATION                                                                 | 23    
|                              |                                                                                        |       
|ITEM 11.                      | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK                       | 37    
|                              |                                                                                        |       
|ITEM 12.                      | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                                 | 37    
|                              |                                                                                        |       
|PART II                       |                                                                                        | 37    
|                              |                                                                                        |       
|ITEM 13.                      | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                        | 37    
|                              |                                                                                        |       
|ITEM 14.                      | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
      AND USE OF **PROCEEDS** | **37**
|                              |                                                                                        |       
|ITEM 15.                      | CONTROLS AND PROCEDURES                                                                | 37    
|                              |                                                                                        |       
|PART III                      |                                                                                        | 40    
|                              |                                                                                        |       
|ITEM 17.                      | FINANCIAL STATEMENTS                                                                   | 40    
|                              |                                                                                       
|INDEX TO FINANCIAL STATEMENTS | 40                                                                                    
|                              |                                                                                        |       
|ITEM 18.                      | FINANCIAL STATEMENTS                                                                   | 56    
|                              |                                                                                        |       
|ITEM 19.                      | EXHIBITS                                                                               | 56    

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FORWARD-LOOKING STATEMENTS

The information in this annual report on Form 20-F contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements involve
risks and uncertainties, including statements regarding our capital needs,
business plans and expectations. Such forward-looking statements involve risks
and uncertainties regarding the availability of private placement financing, the
availability of suitable exploration prospects, the liquidity of our investment
in Austral Pacific Energy Ltd., the potential applicability of the Investment
Company Act of 1940, and other factors. Forward-looking statements are made,
without limitation, in relation to availability of funds and our plan to invest
in directly into suitable new resource exploration projects. Any statements
contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as may, will, should, expect, plan,
intend, anticipate, believe, estimate, predict, potential or
continue, the negative of such terms or other comparable terminology. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined below, and, from
time to time, in other reports we file with the SEC. These factors may cause our
actual results to differ materially from any forward-looking statement. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.

PART I

Currency

All currency amounts are stated in United States dollars unless
otherwise indicated. (Canadian dollars are denoted CAD.)

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS

Not applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected financial data

The selected historical financial information presented in the
table below for each of the years ended July 31, 2005, 2004, 2003, 2002 and
2001, is derived from the audited consolidated financial statements of the
Registrant. The audited financial statements of the Registrant for the years
ended July 31, 2005, 2004 and 2003 are included in this Filing. The selected
historical financial information for the years ended July 31, 2002 and 2001
presented in the table below are derived from audited financial statements of
the Registrant that are not included in this Filing but were included in
previous filings. The selected financial information presented below should be
read in conjunction with the Registrants consolidated financial statements and
the notes thereto (Item 17) and the Operating and Financial Review and Prospects
(Item 5) elsewhere in this Filing.

The selected consolidated financial data has been prepared in
accordance with Canadian Generally Accepted Accounting Principles (Canadian
GAAP). The consolidated financial statements included in Item 17 in this filing
are also prepared under Canadian GAAP. Included within these financial
consolidated statements in Note 10 is a reconciliation between Canadian and US
GAAP.

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- 2 -

Under Canadian Generally Accepted Accounting Principles (in
US$)

|                       | Year Ended July 31
|---------------------- | ------------------
|                       | 2005              
|                       | $                 
|Balance Sheet Data     |                   
|Current Assets         | 237,601           
|Investments            | 2,219,072         
|Property and Equipment | 85,316            
|Oil and Gas Interests  | -                 
|Total Assets           | 2,541,989         
|Share Capital          | 13,175,075        
|Share Capital held by  |                   
|subsidiary             | -                 
|Deficit                | (10,653,466)      
|                       |                   
|Operating Data         |                   
|Gross Revenue          | 1,896             
|Net Income (Loss)      | 1,142,246         
|Net Income (Loss)      |                   
|per Share              | 0.45              

Under U.S. Generally Accepted Accounting Principles (in US$)

|                       | Year Ended July 31
|---------------------- | ------------------
|                       | 2005              
|                       | $                 
|Balance Sheet Data     |                   
|Current Assets         | 237,601           
|Investments            | 4,263,187         
|                       |                   
|Property and Equipment | 85,316            
|Oil and Gas Interests  | -                 
|Total Assets           | 4,586,104         
|Share Capital          | 14,008,686        
|Deficit                | (11,487,076)      
|Accumulated Other      |                   
|Comprehensive Income   |                   
|(Loss)                 | 2,044,115         
|                       |                   
|Operating Data         |                   
|Gross Revenue          | 1,896             
|Net Income (Loss)      | 1,142,246         
|Comprehensive Income   |                   
|(Loss)                 | 2,282,787         
|Net Loss per Share     | 0.45              
|
|
|

Although there are differences between Canadian GAAP and US GAAP there are
  no material differences, with the exception of Investments and Comprehensive
  Income (Loss), for the years ended July 31, 2005 and 2004. (See also Item 17.)
  These material differences between Canadian and US GAAP are discussed in Note
  10 to the financial statements.

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Exchange Rates

The Registrants financial statements, as provided under Item 8
and 17 are presented in United States Dollars. On July 31, 2005 the buying rate
for Canadian dollars was US $1.00 for CAD$1.2241. At the close of business on
January 14, 2006 the buying rate for Canadian dollars was US$1.00 for
CAD$1.1583. Rates of exchange are obtained from the Bank of Canada and believed
by the Registrant to approximate closely the rates certified for customs
purposes by the Federal Reserve Bank in New York.

The following table sets out the buying rate for Canadian
dollars for the last six months of the fiscal year:

|          | Feb 2005 | Mar 2005 | Apr 2005 | May 2005 | Jun 2005 | Jul 2005
|--------- | -------- | -------- | -------- | -------- | -------- | --------
|Month End | 1.2335   | 1.2096   | 1.2554   | 1.2552   | 1.2254   | 1.2241  
|Average   | 1.2383   | 1.2157   | 1.2374   | 1.2553   | 1.2403   | 1.2232  
|High (2)  | 1.2559   | 1.2438   | 1.2585   | 1.2696   | 1.2571   | 1.2436  
|Low (2)   | 1.2249   | 1.2018   | 1.2151   | 1.2372   | 1.2254   | 1.2027  

The following table sets out the buying rate for Canadian
dollars for the last five fiscal years:

|             | 2005   | 2004   | 2003   | 2002   | 2001  
|------------ | ------ | ------ | ------ | ------ | ------
|             |        |        |        |        |       
|Year End (1) | 1.2241 | 1.3295 | 1.4048 | 1.5776 | 1.5325
|Average      | 1.1789 | 1.3382 | 1.4959 | 1.5700 | 1.5237
|High (2)     | 1.2185 | 1.4072 | 1.6010 | 1.6125 | 1.5793
|Low (2)      | 1.1467 | 1.2712 | 1.3323 | 1.5122 | 1.4730

Notes:
  (1) Year end is July 31.
  (2) The high and low buying rate figures are selected from daily high and low
  figures.

B. Capitalization and indebtedness

Not applicable

C. Reasons for the offer and use of proceeds

Not applicable

D. Risk Factors

The common shares of the Registrant must be considered a
speculative investment due to a number of factors primarily related to the
nature of its business (resource exploration) and its early stage of development
and history of losses. An investment in the Registrants common shares should
only be made by persons who can afford to lose their entire investment and there
can be no assurance that the Registrants common shares will increase in value.
The purchase of the common shares involves a number of significant risk factors.
Purchasers of common shares should consider the following:

1. Investments

The Registrants principal asset and source of liquidity is its
shares of Austral Pacific Energy Ltd. and the Registrants financial condition
and liquidity will be adversely impacted in the event of a decline in the share
price of Austral Pacific. The Registrant does not control Austral Pacific and
accordingly, decisions made by Austral Pacific may adversely impact the
Registrant.

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- 4 -

2. Need for New Exploration Prospects, Failure to Locate
Commercial Quantities of Hydrocarbons

The Registrant currently has no directly-operated petroleum
prospects and is searching for possible new projects. This will require
additional funding. Exploration for hydrocarbons is a speculative venture
necessarily involving substantial risk. There is no certainty that the
expenditures the Registrant may incur on any exploration properties which may be
acquired will result in discoveries of commercial quantities of hydrocarbons. In
addition, even if hydrocarbons are discovered, the costs of extraction and
delivering the hydrocarbons to market, and variations in the market price may
render any deposit found uneconomic. Geological conditions are variable and
unpredictable. Even if production is commenced from a well, the production will
inevitably decline and may be affected or terminated by geological conditions
that cannot be foreseen.

3. History of Losses

Excluding the 2005 and 2004 fiscal years, the Registrant has a
history of losses from operations from failed investments in oil and gas and the
internet. There is no assurance that the Registrant will enjoy any success in
any future business activity.

The Registrant has limited financial resources and it may not
be able to raise sufficient funds to either acquire new oil and gas prospects or
to maintain its corporate existence. The Registrant currently has no operating
revenues and relies principally on the issuance of common shares and the sale of
its assets (primarily securities) to raise funds to finance its business of
seeking hydrocarbon prospects. There is no assurance that market conditions will
continue to permit the Registrant to raise funds on acceptable terms or at all.
Such financings will almost certainly result in equity dilution to existing
shareholders.

4. Funding Through Equity and Asset Sales

The Registrant at this time expects to principally rely on
selling its equity securities to raise funds to finance its business of seeking
hydrocarbon prospects and to identify, finance and provide business development
services to early-stage resource and technology businesses. The Registrant also
expects that it will be likely that it will have to resell its holdings of
securities in Austral as another source of funds. There can be no assurance that
a market for Australs common shares will be sufficiently liquid to permit such
potential resales at prices which will be acceptable to management or which will
not cause a loss on resale. It should be assumed that the market for the
Australs common shares may continue to be illiquid, sporadic and volatile.

5. Competition with Other Companies

Other companies with greater financial resources and/or
expertise are in competition with the Registrant for oil and gas prospect and
investment opportunities. The Registrant must compete with such companies in
bidding for the acquisition of petroleum interests from various state
authorities, in purchasing or leasing equipment necessary to explore for,
develop and produce hydrocarbons and in obtaining the services of personnel in
the exploration for, and development and production of, hydrocarbons.

6. Consequences of Failure to Satisfy Prescribed Permit or
License Terms and Conditions

The Registrant may acquire or hold interests in unproven
exploration permits and varying circumstances, including an inadequacy in the
financial resources available to the Registrant to pay for the work required by
the permit terms and conditions or, the inability of the Registrant to secure
the required equipment such as a drilling rig at the time required, and or
circumstances beyond the control or influence of the Registrant may result in
the failure to satisfy the terms and conditions of the permit and could
therefore result in the complete loss or surrender of the interest in the permit
or license without compensation to the Registrant.

7. No Petroleum Reserves

The Registrant has no properties on which any petroleum or
other hydrocarbon in commercial quantities is known to exist.

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- 5 -

8. Thinly Traded Public Market

The Registrants shares trade on the OTC Bulletin Board. The
Registrant has only 259 registered shareholders as at January 19, 2006, and its
shares are relatively thinly traded. There can be no assurance that a stable
market for the Registrants common shares will ever develop or, if it should
develop, be sustained. It should be assumed that the market for the Registrants
common shares will continue to be highly illiquid, sporadic and volatile. The
Registrant is required to maintain its status as a reporting issuer under the
Securities Exchange Act of 1934, in order to be traded by broker-dealers
regulated by the National Association of Securities Dealers. If the Registrant
fails to remain current in its filings with the Securities and Exchange
Commission, the Registrant may be delisted and its shareholders may not be able
to sell their shares in the public market within the United States.

9. Dealings With Associated Companies

In previous fiscal years the Registrant was associated through
common directors, common officers and common shareholdings with other public
junior resource companies disclosed herein. The Registrant may hold equity
investments in these other companies. In certain cases, the Registrant has
previously been assigned interests from associated companies in compliance with
applicable corporate law. The Registrant may also make application for interests
in petroleum properties with associated companies. Persons who are not willing
to rely on the discretion and judgment of management and the boards of directors
of the Registrant and the associated companies should not consider a purchase of
its securities.

See Item 7  Major Shareholders and Related Transactions

10. Value of Properties

The amounts attributed to future properties in the Registrants
financial statements represent acquisition and exploration expenditures only,
and should not be taken to in any way reflect realizable value.

11. Investment Company Act

The Registrant may incur significant costs to avoid investment
company status and may suffer other adverse consequences if deemed to be an
investment company under the Investment Company Act of 1940 (Investment
Company Act). Some of the Registrants equity investments in other businesses
may constitute investment securities under the Investment Company Act. A company
may be deemed to be an investment company if it owns investment securities with
a value exceeding 40% of its total assets, subject to certain exclusions.
Investment companies are subject to registration under, and compliance with, the
Investment Company Act unless a particular exclusion or safe harbor provision
applies. If the Registrant were to be deemed an investment company, it would
become subject to the requirements of the Investment Company Act. As a
consequence, the Registrant would be prohibited from engaging in business or
issuing securities as it has in the past and might be subject to civil and
criminal penalties for non-compliance. In addition, certain of the Registrants
contracts might be voidable, and a court-appointed receiver could take control
of the Registrant and liquidate the business. Unless an exclusion or safe harbor
was available to the Registrant, it would have to attempt to reduce its
investment securities as a percentage of its total assets. This reduction can be
attempted in a number of ways, including the disposition of investment
securities and the acquisition of non-investment security assets. If the
Registrant were required to sell investment securities, the Registrant may sell
them sooner than it otherwise would have based on economic factors solely. These
sales would likely be at depressed prices and the Registrant may never realize
anticipated benefits from, or may incur losses on, these investments. The
Registrant may be unable to sell some investments due to contractual or legal
restrictions or the inability to locate a suitable buyer. Moreover, the
Registrant may incur tax liabilities when it sells assets.

12. Penny Stock Regulation and Difficulties in Selling
Shares

The Securities and Exchange Commission (the SEC) has adopted
rules that regulate broker-dealer practices in connection with transactions in
penny stocks. Penny stocks generally are equity securities with a price of
less than $5.00 per share (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ

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National Market System, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system).

The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the SEC that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with bid and
offer quotations for the penny stock, the compensation of the broker-dealer and
its salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customers account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination that a penny stock is a suitable investment for the purchaser and
receive the purchasers written agreement to the transaction. These disclosure
requirements often have the effect of reducing the level of trading activity in
any secondary market for a stock that becomes subject to the penny stock rules.

The Registrants common stock is currently subject to the penny
stock rules. Accordingly, investors may find it difficult to sell their shares,
if at all.

13. Concentration of Ownership and Ineffective Voting
Powers

The directors, officers and other affiliates of the Registrant
beneficially own a sufficient number of the outstanding common shares of the
Registrant to have substantial influence over matters which may require a
majority vote of the Registrants shareholders, such as the election of members
of the board of directors or the sale of all or substantially all of the
Registrants assets. Should the directors, officers and affiliates vote their
shares in a like manner on a matter requiring a majority vote of the
Registrants shareholders, it is most likely that their position on the matter
would control the outcome of the vote. Additionally, because the directors,
officers and affiliates posses substantial influence over the Registrant through
their significant shareholdings, the value attributable to the right to vote is
greatly reduced. This could result in a reduction in the market value to the
shares owned by a shareholder because of the ineffective voting power.

ITEM 4. INFORMATION ON THE REGISTRANT

A. History and Development of the Registrant

Corporate Actions:

Our legal and corporate name is Trans-Orient Petroleum Ltd.
although we had the name changes below. We are a Vancouver, British Columbia,
Canada based company. As a company domiciled in British Columbia, Canada, our
legally registered office is 1500 Royal Centre, 1055 West Georgia Street, P.O.
Box 11117, Vancouver, B.C. V6E 4N7. Our principal business office is located at
Suite 1407-1050 Burrard Street, Vancouver, B.C., Canada, V6Z 2S3.

The Registrant was incorporated on July 25, 1986 under the name
Palo Duro Exploration Ltd. by the registration of memorandum and articles under
the Company Act (British Columbia). The Registrant changed its name to
Stoney Creek Mines Ltd. on July 15, 1988 and to Cyn-Tech Ventures Ltd. on June
30, 1992. On June 30, 1992 the Registrant consolidated its shares on a one new
for three old basis. On June 29, 1995 the Registrant consolidated its shares on
a one new for five old basis and changed its name to Consolidated Cyn-Tech
Ventures Ltd. On June 27, 1996 the Registrant subdivided its shares on a three
new for one old basis and changed its name to Trans-Orient Petroleum Ltd. On
September 26, 1997 the Registrant was continued from a company subsisting under
the Company Act (British Columbia) to a company subsisting under the
Business Corporations Act (Yukon). On May 4, 1998 the Registrant
subdivided its shares on a two new for one old basis and increased its
authorized capital to 200,000,000 shares without par value. On January 17, 2001
the Registrant consolidated its common shares on a one new for twelve old basis,
and increased its authorized capital from 200,000,000 to an unlimited amount
without par value. The Registrant received shareholder approval at the Annual
and Special meeting on January 18, 2002 to further consolidate all of its common
shares on a one new for three old basis. The Registrant implemented this
consolidation on April 5, 2002. The Registrant did not change its name as a
result of the consolidation.

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- 7 -

On January 16, 2006 the Registrant was continued out of the
jurisdiction of the Yukon Territory and into British Columbia. It is now a
company subsisting under Business Corporations Act (British Columbia)
which replaced the Company Act (British Columbia) in 2004.

The Registrant became a public or reporting company in
British Columbia on obtaining a receipt for its initial prospectus offering in
British Columbia in April, 1989 and the trading of its shares through the
facilities of the Vancouver Stock Exchange (VSE) commenced about that time. On
June 10, 1997 the shares of the Registrant commenced trading on the National
Association of Securities Dealers OTC Bulletin Board (the OTCBB) under the
symbol TEPUF. On July 31, 1997 the shares of the Registrant were voluntarily
delisted from trading through the facilities of the VSE. Currently the
Registrants trading symbol on the OTCBB is TOPLF.

Acquisitions and dispositions:

Subsequent to our year ended July 31, 2005, the Registrant
exercised 500,000 TAG Oil share purchase warrants at a price of $0.60 per share.
The Registrant then sold 1,000,000 shares of its investment in TAG Oil at an
average price of approximately $1.14 per share.

The registrant then purchased 200,000 units of Austral at a
price of $2.50 per unit. Each unit consists of one common share and one half of
one share purchase warrant, with each warrant entitling the Registrant to
purchase one common share at a price of $3.50 per share for one year subject to
an accelerated expiry if a trigger price of $4.50 is reached in the first twelve
months from the issue date. The expiry date of the warrants, if not accelerated
is October 13, 2005.

The Registrant also sold 7,305,500 common shares of its
controlled subsidiary AMG Oil Ltd. The shares were sold at a price of $0.01 for
proceeds of $73,055. As a result of the sale the Registrant no longer controls
AMG Oil.

2005:

During the 2005 fiscal year, the Registrant sold 788,800 shares
of its investment in Austral, with a book value of $998,160 or $1.27 per share,
for $2,216,479 or approximately $2.81 per share, resulting in a gain over
carrying value of $1,218,319. The proceeds of this sale and additional working
capital were used to exercise 836,845 Austral share purchase warrants at an
exercise price of $1.50 per share. On December 21, 2004 the Registrant exercised
an additional 382,750 Austral share purchase warrants at an exercise price of
NZ$2.10 per share.

The Registrants controlled subsidiary, AMG Oil sold 100,000
shares of Gondwana Energy, Ltd. with a book value of $10,000, for proceeds of
$6,000 resulting in a loss on sale over carrying value of $4,000.

On March 18, 2005, the Registrant participated in a private
placement in TAG Oil Ltd. The Registrant purchased 500,000 units, at $0.40 per
nit. Each unit consists of one share and one share purchase warrant with each
warrant entitling the Registrant to purchase one common share at a price of
$0.60 per share in the first year and $0.80 in the second year, subject to an
accelerated expiry if a trigger price is reached of $1.00 in year one and $1.20
in year two, in which event the warrant will expire thirty days after notice is
given to the holder that the trigger price was reached, if not exercised.

2004:

On December 4, 2003, the Registrant sold 725,000 shares of its
investment in Austral at a price averaging approximately $1.25 per share. The
Registrant then replaced these shares on December 11, 2003 by participating in
Australs initial public offering to list on the New Zealand Stock Exchange. The
Registrant acquired 765,500 units in Austral at a price of $1.30 (NZ$2.00), per
unit. Each unit consisted of one common share and a half share purchase warrant
exercisable at a price of $1.37 (NZ$2.10) until January 5th, 2005. The
Registrant also acquired an additional 175,000 shares of Austral Pacific through
the exercise of share purchase warrants at a price of $201,250 or $1.15 per
share.

During the 2004 fiscal year, the Registrant also sold an
additional 93,500 shares of Austral Pacific for approximately $1.94 per share.
The Registrant also reached an agreement with Austral in December 2003 to amend
the Registrants

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- 8 -

836,845 Series A warrants. The Series A warrants expiry date
was extended to January 5th, 2005 in consideration of the Client agreeing that
the warrants would be exercisable for a common share of Austral only and not the
Austral share and series B warrant into which the Series A warrant was
originally exercisable as well as an increase in the exercise price of the
Series A warrants by US$0.10 to US$1.50 per common share.

2003:

On March 4, 2003, the Registrant acquired a 49.4% controlling
interest in AMG Oil, due to the repurchase by AMG Oil of 3,000,000 shares of its
own common stock for cancellation and return to treasury. AMG Oil does not have
significant assets or operations. As a result of the Registrant acquiring a
controlling interest in AMG Oil, the Registrant began reporting its investment
in AMG Oil on a consolidated basis starting March 4, 2003 and continuing until
the sale of control of AMG Oil by the Registrant on November 29, 2005.

On September 6, 2002, the Registrant acquired, by way of
private placement, 175,000 units of Austral at $0.80 per unit. Each unit
consists of one common share and share purchase warrant, exercisable at $0.90 in
the first year and $1.15 in year two ending September 6, 2004.

The Registrant sold 119,800 shares of Austral at a price of
approximately US$0.82 per share.

Financing:

2005:

The Registrant did not conduct any financing activities during
the 2005 fiscal year. During the year, all of the Registrants outstanding share
purchase warrants and stock options expired as they were not exercised.

2004:

The Registrant approved an extension in the term of its
outstanding share purchase warrants for an additional year, subject to an
increase in the exercise price of $0.05 per share to $0.35 per share and the
warrant holders agreeing to exercise 100,000 warrants at the original exercise
price of $0.30.

2003 and 2002:

Pursuant to private placement agreements during the 2002 fiscal
year, the Registrant completed a financing consisting of 1,000,000 units in its
capital stock at US$0.20 per unit. Each unit consists of one common share and
one share purchase warrant, exercisable at US$0.25 in year one and US$0.30 in
year two.

B. Business Overview

Nature of Operations

The Registrant is a Vancouver, British Columbia, Canada based
company that previously relinquished its direct oil and gas prospect interests
in exchange for securities in several affiliated companies the most important of
which is Austral Pacific Energy Ltd. As of January 18, 2006, the Registrant
holds share equity interests in three junior oil and gas exploration companies.
In addition the Registrant currently plans to invest directly into suitable new
exploration projects and to consider investing venture capital into existing
exploration and technology companies.

During the year ended July 31, 1997 the Registrant changed the
focus of its business from petroleum exploration in Canada to petroleum
exploration in the Austral-Pacific region and began to acquire and explore
petroleum interests in the region, often together with one or more companies, in
particular Austral Pacific Energy Ltd.

Between July 1997 and January 2000, the Registrants primary
focus was on oil and gas exploration through varying participating interests in
thirteen permits, located in New Zealand, Australia and Papua New Guinea. On May
23, 2000, the Registrant held a Special Meeting of Shareholders and the
Registrants shareholders approved the sale of its

---

- 9 -

directly-held interests in its oil and gas permits located in
New Zealand, Australia and Papua New Guinea to Austral, a company with certain
common shareholders and directors. Under the terms of the sale, a loan payable
of approximately $1,042,000 owing to Austral by the Registrant was offset
against the purchase price and the Registrant received 4,184,224 Austral units
consisting of one common share and a Series A share purchase warrant of
Austral which warrants have been amended as described above.

The Registrant also received, under the sale, a gross
overriding royalty over any future hydrocarbon production of the Australia and
Papua New Guinea permits, however these royalties were surrendered for amended
equity warrants in Austral, which were further amended as described above and
below.

The Registrant also received additional consideration for the
sale of its oil and gas interests under the Austral sale as follows:

|1. | 1,800,000 common shares of AMG Oil valued at $720,000 for
      the transaction, and an option to purchase further shares of AMG Oil which
      option has expired unexercised;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                 
|2. | 600,000 shares of Gondwana Energy, Ltd. valued at
      $20,000; and                                                                                                            
|   |                                                                                                                                                                                 
|3. | 517,020 shares of the Registrant which were surrendered
      for cancellation (originally valued at $222,319).                                                                 

The Registrants wholly owned subsidiaries, Trans-Orient
Petroleum (PNG) Limited, Trans-Orient Petroleum (AUST) Pty. Ltd. and ZOCA 96-16
Pty. Ltd. were sold to Indo-Pacific Energy Ltd. pursuant to the transaction. The
total purchase price for the assets sold to Indo-Pacific equated to
$4,097,360.

During the Registrants 2001 fiscal year, Austral consolidated
its common shares on a one new for five old basis resulting in the number of
shares the Registrant owned of Austral at that time being consolidated from
4,184,224 shares to 836,845 shares. As a result of this consolidation all
warrants were also consolidated on a one new for five old basis but pursuant to
the new agreement these warrants were repriced as described above.

The warrants received on the Austral sale were amended as per
an agreement reached between the Registrant and Austral dated January 3, 2002
and were further amended per an agreement dated December 9, 2003 whereby their
term was extended to January 5th, 2005 and their conversion was reduced to
Austral common shares only (no Series B warrant in addition to such shares).
Under these 2002 amending agreements the Registrant agreed to terminate all its
royalty rights over exploration permits sold to Austral under the Austral sale.
In return, Austral agreed to amend the terms of the warrants received by the
Registrant.

Concurrent with the sale of the Registrants oil and gas
interests in May 2000, the Registrant implemented a new business plan to expand
its investments in internet infrastructure and e-commerce. To this end the
Registrant wrote-off its investment in Verida Internet Corp. in the amount of
$3,225,869, which accounts for the majority of the loss recorded in fiscal 2001.

The Registrant, during the 2005 fiscal year, sold 788,800
(2004: 818,500 and 2003: 119,800 and 2002: 59,900) shares of Austral with a
carrying value of $998,160 (2004: $556,020 and 2003: $88,652 and 2002: $67,075)
for cash proceeds of $2,216,479 (2004: $1,084,951 and 2003: $98,706 and 2002:
$76,908).

In summary, the Registrants current primary asset at January
19, 2006 is its 6.99% interest in the equity of Austral. Austral has a market
capitalization in the $40 million range.

The Registrants 100% owned subsidiary, DLJ Management Corp.
provides management, accounting and reporting services to companies on a cost
recovery basis. These companies are Austral Pacific, TAG Oil Ltd. and AMG Oil
Ltd.

C. Organizational Structure

The Registrant, during the 2003 fiscal year completed the
liquidation of its inactive wholly-owned subsidiaries, being Reservoir Rock
Holdings Ltd. and Trans-Orient Petroleum (NZ) Limited. The Registrant has one
remaining active

---

- 10 -

wholly owned subsidiary, being DLJ Management Corp. Unless
indicated otherwise, the terms the Registrant or any reference to its business
and operations means Trans-Orient Petroleum Ltd. inclusive of its wholly-owned
subsidiaries. For further information relating to the acquisition and subsequent
sale of the controlling interest in AMG Oil Ltd. and the effects on the
Registrant, please refer to Item 17.

D. Property, Plant and Equipment

The Registrant has no direct oil and gas interests so it has no
operational property, plant or equipment. The Registrant maintains a corporate
office space at 1407-1050 Burrard Street, Vancouver, BC, Canada. The office
space is shared with other public companies all of whom receive corporate
services from the Registrants wholly-owned subsidiary DLJ Management Corp. The
Registrant also owns a 400 sq. foot office condominium located at 1406-1050
Burrard Street, Vancouver B.C. The office condominium was originally purchased
for CAD $147,000 and is held for investment purposes and as office space for the
Registrants President and Chief Executive Officer. In addition to its interest
in Austral, the Registrant also currently owns:

|(a) | 894,500 common shares of AMG Oil Ltd. with a current
      market bid price of $0.35 per share. 5,000,000 warrants to acquire a
      further 5,000,000 common shares, at a price of $1 per share, of AMG Oil
      Ltd, expired on April 10, 2005 as they were not exercised. AMG Oil Ltd. is
      a reporting company under the Securities Exchange Act of 1934whose
      shares have been quoted on the OTCBB since January 15, 2003. The
      registrants present interest in AMG Oil account for 5.3% of the
      outstanding shares of AMG Oil. The registrant accounts for the investment
      in AMG Oil using the cost method. The Registrant disposed of 7,305,500
      shares of AMG Oil on November 29, 2005 for $0.01 per share, as described
      above.                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(b) | 399,999 common shares (2,400,000 prior to a 1 for 6
      reverse split) of Gondwana Energy, Ltd. with a current market bid price of
      $0.85 per share of Gondwana Energy, Ltd. Gondwana Energy is a reporting
      company under the Securities Exchange Act of 1934whose shares have
      been quoted on the OTCBB since November 9, 2005. Previously Gondwana
      traded on the Pink Sheets LLC. The Registrants present interest in
      Gondwana accounts for 12.4% of the outstanding shares of Gondwana. The
      quoted current market price is an amount which implies the price exceeds
      the estimated value of Gondwanas assets. The Registrant accounts for the
      investment in Gondwana using the cost method and as a result the carrying
      value of the investment is $40,000.

As both the AMG and Gondwana markets are highly illiquid, the
Registrant does not consider the currently quoted prices realizable.

ITEM 5. OPERATING, FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is managements opinion
of the Registrants historical financial and operating results and should be
read in conjunction with the audited consolidated financial statements of the
Registrant (See Item 17) for the years ended July 31, 2005, 2004, and 2003,
together with the notes related thereto. The financial statements have been
prepared in accordance with Canadian GAAP, and a reconciliation to US GAAP is
provided in the notes to the financial statements, under Item 17. All dollar
values are expressed in United States dollars, unless otherwise stated.

The consolidated financial statements include the accounts of
the Registrant, its wholly-owned subsidiary, DLJ Management Corp., and AMG Oil
Ltd., a subsidiary in which it held a 49.4% controlling interest consisting of
8,200,000 shares. Subsequent to fiscal 2005, the Registrant sold 7,305,500
shares of AMG Oil and as a result no longer controls that company.

Operating Results

Summary

The Registrant does not generate any sales or revenue from oil
and gas operations. With the exception of the 2005 and 2004 fiscal years net
income of $1,142,246 and $458,829, respectively resultant from the sales of
Austral Pacific, which the Registrant believes are of a non-recurring nature, it
has experienced losses in each of its fiscal periods since

---

- 11 -

incorporation. The Registrants only source of capital
currently is the issuance of equity securities and, to a lesser extent, the sale
of assets consisting primarily of equity securities in Austral Pacific. Total
losses incurred from incorporation to the fiscal period ending July 31, 2005
were $10.65 million. The level of future operations, if any, may be limited by
the availability of capital resources, the sources of which are not predictable.
As a consequence of not currently having oil and gas prospects and the financial
resources to explore them, the Registrants results from operations may not be a
meaningful way of evaluating the Registrants current prospects, which are quite
dependent on the success of Austral Pacific. Accordingly management believes
that the primary financial information of relevance to investors, in
managements opinion, are the measures of liquidity and solvency.

Results of Operations -2005 Compared to 2004 and
2003

The Registrant has not received any revenue from oil and gas
operations. Any revenue received by the Registrant was received as a result of
minor amounts of interest income earned on cash balances.

The Registrants net income for the twelve-month period ended
July 31, 2005 was $1,142,246 or $0.45 per share compared to net income for July
31, 2004 of $458,829 or $0.19 per share, and a net loss of $261,007 or $0.11 per
share for the period ended July 31, 2003. The Registrants net income for 2005
(2004: income and 2003: loss) consisted of general and administrative costs of
$105,757 (2004: $124,040 and 2003: $144,754), a loss on sale of investments of
$4,000, a loss on sale of stock held by subsidiary of $8,685 and a write-off of
an oil and gas interest of $1. These items were offset by a gain on sale of
investment of $1,218,319, interest income of $1,896, a recovery of loan
receivable previously written-off of $29,004 and a non-controlling interest
adjustment of $11,470 relating to AMG Oil Ltd.

The Registrants gain on sale of investments of $1,218,319 was
resultant from sales of the Registrants investment in Austral Pacific Energy
Ltd. The Registrant sold 788,800 shares with a carrying value of $998,160, for
proceeds of $2,216,479. The sale of the investment in Austral generated
sufficient cash to participate in a private placement to acquire 500,000 units
in TAG Oil Ltd, the details of which have been described above.

During the 2005 fiscal year, the Registrants controlled
subsidiary AMG Oil, sold 100,000 shares of Gondwana Energy, Ltd. with a book
value of $10,000 for proceeds of $6,000 resulting in a loss over carrying value
of $4,000.

The Registrant, subsequent to the 2005 fiscal year, acquired an
additional 200,000 units of Austral at a price of $2.50 and also exercised share
purchase warrants to acquire 500,000 shares of TAG Oil at a price of $0.60 as
well as selling 1,000,000 shares of TAG Oil, the details of which have been
described above.

For the comparable period last year the Registrants loss from
operations were affected by interest income of $1,696, a recovery of a loan
receivable previously written-off of $24,660, a recovery of costs of $46,477 a
gain on sale of investment in associated company of $528,931, a loss on
forgiveness of loan receivable of $30,000 and a write-off of property and
equipment of $21,161.

Costs and expenses

For the year ended July 31, 2005, the General and
Administrative (G&A) expenses totalled $105,757 which was slightly lower
for the year when compared with G&A costs totalling $124,040 for the year
ended July 31, 2004. Although total G&A costs were lower during the year a
majority of the G&A costs such as directors fees, filing and transfer agency
fees, legal, travel promotion and accomodation increased during the 2005 fiscal
year as a result of the increased amount of corporate activity relating to the
Registrants operations. These increases to G&A were more than offset by a
gain on foreign exchange of $67,560 resultant from differing currencies involved
in the purchase and sales of the Registrants investments. Refer to Item 17 for
further information on costs and expenses.

Losses before other items were equivalent to the general and
administrative expenses for the year ended July 31, 2005 totalling $105,757
versus a loss of $124,040 (2003: $144,754) for the comparable period last year.

Inflation

Not applicable.

---

- 12 -

Foreign Currency Fluctuations

The Registrant holds its cash reserves primarily in US dollars
and does not have significant obligations in other currencies so it does not
perceive it is currently subject to significant exchange risks.

Government Regimes

The Registrant, through its equity holdings of Austral Pacific,
is indirectly subject to foreign governmental regulations that relate directly
and indirectly to its operations including title to the petroleum interests
acquired by the Registrant, production, marketing and sale of hydrocarbons,
taxation, environmental matters, restriction on the withdrawal of capital from a
country in which the Registrant is operating and other factors. There is no
assurance that the laws relating to the ownership of petroleum interests and the
operation of the Registrants business in the jurisdictions in which it
currently operates will not change in a manner that may materially and adversely
affect its business. There is no assurance that the laws of any jurisdiction in
which the Registrant carries on business may not change in a manner that
materially and adversely affects its business.

Differences between Canadian and U.S. Generally Accepted
Accounting Principles

The Registrant is subject to changes in accounting standards.
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (Canadian GAAP) that conform in all
material respects with United States generally accepted accounting principles
(U.S. GAAP) that affect the Registrant, with some exceptions that are detailed
below in Item 17, Note 10 Differences between Canadian and United States
Generally Accepted Accounting Principles.

New Accounting pronouncements

At the date of this report there have been no new accounting
pronouncements that will have an affect on the Registrant.

Liquidity and capital resources 2005 Compared to 2004 and
2003

Currently, the Registrant has sufficient capital to satisfy its
overhead expenditures for the 2006 fiscal year. These overhead expenses average
$12,000 per month for the administration salaries, premises, professional fees
and like costs and expenses associated with being a public company. The
Registrant did not receive any revenue from its operations in 2005 and does not
expect to receive any operational revenue during the fiscal 2006 year. Overhead
expenditure needs after fiscal 2006 will likely require the Registrant to raise
additional capital, from outside sources or sell assets, primarily its portfolio
of investments. It is uncertain whether the Registrant will be able to secure
outside sources of capital or sell its investments in amounts that are
sufficient for the Registrant to continue with its expected operations. Due to
the nature of its business, the Registrant does not believe that debt financing
is available to it.

Operating Activities:

At July 31, 2005 the Registrant had $231,066 in working capital
(July 31, 2004: $105,169, July 31, 2003: $257,751). Cash on hand was $190,053,
$69,887, and $227,289 at July 31, 2005, 2004 and 2003 respectively. The
Registrant had negative cash flow from operations of $76,228, $76,103, and
$129,366 for the years ending July 31, 2005, 2004 and 2003 respectively.

Financing Activities:

The Registrants did not conduct any financing activities
during the 2005 fiscal year however financing activities generated $30,000
during the 2004 fiscal year and $Nil during the 2003 fiscal year. The financing
activities during the 2004 fiscal year consisted of the Registrant receiving
$30,000 as a result of the issuance of 100,000 common shares upon the exercise
of share purchase warrants. During the 2005 fiscal year all of the Registrants
27,777 stock options and 900,000 share purchase warrants expired
unexercised.

---

- 13 -

Investing Activities:

Subsequent to the 2005 fiscal year and to the date of this
report the Registrant completed the following:

The Registrant acquired 500,000 shares of TAG Oil through the
exercise of its 500,000 share purchase warrants at a price of $0.60 per share.
The Registrant then sold 1,000,000 shares of TAG Oil with a cost of $500,000 for
proceeds of $1,141,581 for a gain over book value of $641,581.

The Registrant also participated in a private placement
financing in Austral Pacific after the 2005 fiscal year by acquiring 200,000
units of Austral at $2.50 per unit. Each unit consists of one share and one half
of one share purchase warrant, with each warrant entitling the Registrant to
purchase an additional share at a price of $3.50 per share for one year subject
to an accelerated expiry if a trigger price of $4.50 is reached in the first
twelve months from the issue date. The expiry of these warrants, if not
accelerated is October 13, 2006.

On November 29, 2005, the Registrant sold 7,305,500 shares of
its controlled subsidiary, AMG Oil Ltd. The shares were sold at a price of $0.01
per share for proceeds of $73,055. The Registrant now holds 894,500 shares of
AMG Oil (5.39%) and as a result no longer controls AMG Oil.

2005:

Investing activities for the 2005 fiscal year consisted of the
Registrant receiving net proceeds of $2,216,479 from selling 788,800 shares of
Austral Pacific, with a carrying value of $998,160, resulting in a gain on sale
amounting to $1,218,319.

The Registrant, through its controlled subsidiary AMG Oil
received $6,000 from selling 100,000 shares of Gondwana Energy, Ltd. with a
carrying value of $10,000, resulting in a loss over carrying value of $4,000.

AMG Oil also sold 2,205 shares of the Registrant for proceeds
of $3,308, with a carrying value of $11,993, resulting in a loss over carrying
value of $8,685.

During the 2005 fiscal year the Registrant acquired 836,845
shares of Austral Pacific at a price of $1.50 per share through the exercise of
share purchase warrants and acquired another 382,750 shares of Austral Pacific
at a price of NZ$2.10 per share through the exercise of share purchase
warrants.

The Registrant participated in a private placement in TAG Oil
Ltd, purchasing 500,000 units of TAG at a price of $0.40 per unit. Each unit
consists of one common share and one share purchase warrant with each warrant
entitling the Registrant to purchase one common share at a price of US$0.60 per
share in the first year and $0.80 in the second year, subject to an accelerated
expiry if a trigger price is reached of $1.00 in year one and $1.20 in year two,
in which event the warrant will expire thirty days after notice is given to the
holder that the trigger price was reached, if not exercised.

2004:

Investing activities for the 2004 fiscal year consisted of the
Registrant receiving net proceeds of $1,084,951 from selling 818,500 shares of
its investment in Austral Pacific, with a carrying value of $556,020, resulting
in a gain on sale amounting to $528,931. The Registrant also purchased 765,500
units of Austral Pacific at a price of approximately US$1.30 (NZ$2.10) per unit
by participating in Austral Pacifics initial public offering (IPO) to list on
the New Zealand Stock Exchange. Each unit of Austral Pacific purchased under the
IPO includes one common share and a half warrant, exercisable for one year at a
price of approximately $1.37 (NZ$2.20) . The Registrant also acquired an
additional 175,000 shares of Austral Pacific through the exercise of share
purchase warrants at a price of $201,250 or $1.15 per share.

2003:

Investing activities for the 2003 fiscal year consisted of
purchasing 175,000 units of Austral Pacific at $0.80 per unit with each unit
consisting of one common share and one share purchase warrant, exercisable at
$0.90 in the first year

---

- 14 -

and $1.15 in year two and selling 119,800 shares of Austral
Pacific with a carrying value of $88,652 for cash proceeds of $98,706, resulting
in a gain of $10,054. In addition, investing activities of the Registrant were
affected by the acquisition of a controlling interest in AMG Oil Ltd. with a net
investing effect totalling $104,825.

Summary:

The net impact of all cash activities during the twelve months
ended July 31, 2005 resulted in a net increase in cash of $120,166, compared to
a net decrease in cash of $157,402 for the comparable period ended July 31, 2004
and a net decrease in cash of $65,835 for the comparable period ended July 31,
2003.

Our capital resources are comprised primarily of private
investors who are either existing contacts of management or who come to our
attention through brokers, financial institutions and other intermediaries.
Management is of the view that conventional banking is unavailable to
exploration stage resource companies. Our access to capital is always dependent
upon general financial market conditions. Our capital resources have not changed
during our 2005 fiscal year, nor are they anticipated to change during the 2006
fiscal year.

Our anticipated capital expenditures for the remainder of the
2006 fiscal year can be met by our current working capital.

Anticipated Total Work Obligations Before July 31, 2006 (As
at July 31, 2005)

Nil

Research and Development, Patents and Licences

Not applicable.

Trend Information

Fluctuation in the price of the Registrants significant
investment in Austral Pacific, including the fluctuation in liquidity of Austral
Pacific is an important trend to the Registrant.

Off-balance sheet arrangements

The Registrant does not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.

Tabular Disclosure of Contractual Obligations

Payments due by periodContractual Obligations
      Total
      Less
        than 
        1 year
      1-3 years
      3-5 years
      More
        than 5yearsLong-Term Debt Obligations
      -
      -
      -
      -
      -Capital finance/lease
      -
      -
      -
      -
      -Operating lease
      -
      -
      -
      -
      -Purchase obligations
      -
      -
      -
      -
      -Other long-term liabilities 
        reflected on the Registrants 
        balance sheet under the GAAP 
        of the primary financial 
        statements
      -
      -
      -
      -
      -Total
      -
      -
      -
      -
      -


---

- 15 -

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

At January 28, 2006, the directors and officers of the
Registrant were:

|                                   |                                                          | Office Held
|---------------------------------- | -------------------------------------------------------- | -----------
|Name and Municipality of Residence | Position Held                                            | Since      
|                                   |                                                          |            
|Mr. Peter Loretto, (1)             | President and Chief Executive Officer and a              | 2003       
|Richmond, B.C.                     | Director                                                 |            
|                                   |                                                          |            
|Mr. Barry MacNeil, (2)             | Corporate Secretary, Chief Financial Officer and
      a | 2004       
|Surrey, B.C.                       | Director                                                 |            
|                                   |                                                          |            
|Michael Hart, (1)                  | Director                                                 | 1998       
|Roberts Creek, B.C.                |                                                          |            
|                                   |                                                          |            
|Douglas Lynes, (1) (3)             | Director                                                 | 2005       
|Delta, B.C                         |                                                          |            

|Notes: |                                                                                                                                                                     
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)    | Member of audit committee.                                                                                                                                          
|(2)    | On October 27, 2004, Mr. Garth Johnson resigned as
      Corporate Secretary, Chief Financial Officer and as a Director and was replaced
      by Mr. Barry MacNeil.
|
|(3)    | On December 6, 2005, Douglas Lynes was appointed as a Director.                                                                                                     

All directors were re-elected on January 12, 2006 and have a
term of office expiring at the next annual meeting of the Registrant expected in
January of 2007. All officers have a term of office lasting until their removal
or replacement by the board of directors.

Mr. Peter Loretto obtained a Masters of Business Administration
from Gonzaga University, Spokane Washington in 1984 and has been the
Registrants President, Chief Executive Officer and a director since May 12,
2003. Mr. Loretto is also the principal shareholder of the Corporation. For the
last fourteen years, Mr. Loretto has worked as an independent businessman and
investor, within the securities sector as well as participating in other
business opportunities.

Mr. Barry MacNeil is an accountant who has over fifteen years
experience in public practice and is an independent businessman and investor.
Additionally, Mr. MacNeil has worked as a Corporate Accountant for a group of
companies involved in sales and services of mining equipment to the
international mining industry and a lumber company with export sales to Japan,
Europe and Australia. Mr. MacNeil has been the Registrants Corporate Secretary,
Chief Financial Officer and a Director since replacing Mr. Johnson on October
27, 2004.

Mr. Michael Hart has been a director of the Corporation since
December 13, 1999. From April 1999 until present, Mr. Hart has held the position
of President of Hart-Byrne Enterprises Ltd. Hart-Byrne Enterprises Ltd. is a
private company formed by Mr. Hart and other investors, which is developing
specialized products for the music industry. Mr. Hart is also President of On
The Wing Productions Inc., a private company, which is also developing products
for the music industry. Mr. Hart is also the President, Corporate Secretary,
Treasurer and a director of AMG Oil Ltd.

Mr. Douglas Lynes obtained a Bachelor of Commerce degree from
The University of British Columbia, Vancouver, B.C., in 1985 and has been a
member of the Institute of Charted Accountants in British Columbia since 1988.
Mr. Lynes has worked as a Chartered Accountant in public practice for the last
18 years. Mr. Lynes is also a director of AMG Oil Ltd., a former subsidiary
entity which was sold on November 30, 2005.

The Registrant does not have liability insurance to cover its
directors and officers in the performance of their duties. To date, no
agreements to contractually provide indemnities have been executed or
delivered.

---

- 16 -

Compensation

The following table sets forth the aggregate compensation paid
by our company for services rendered during the last full fiscal years
indicated:

SUMMARY COMPENSATION TABLE

Compensation
      Securities Under OptionNamed Executive Officer and Principal
      Position
      Year Ended
      Salary ($)
      Other Annual
      Compensation ($)
      Number of Options
      Exercise Price
      Expiry DatePeter Loretto, President, Chief Executive
      Officer, Director (1)
      2005 2004 2003
      20,000 - -
      - - -
      - - -
      - - -
      - - -Barry MacNeil Secretary, Chief Financial
      Officer, Director (1)(2)
      2005 2004 2003
      - - -
      2,135(3)- -
      - - -
      - - -
      - - -Garth Johnson Former Secretary, Chief
      Financial Officer, Director (1)(2)
      2005 2004 2003
      4,454 9,056
      15,317
      - - -
      - - -
      - - -
      - - -


| | (1) | Mr. Loretto became President and Chief Executive officer
      of the Registrant on May 12, 2003 replacing Mr. Johnson. Mr. Loretto also
      became a Director of the Registrant on May 12, 2003.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                    
| | (2) | Mr Johnson resigned as the Registrants Corporate
      Secretary, Chief Financial Officer and Director on October 27, 2004 and
      was replaced by Mr. MacNeil.                                  
| |     |                                                                                                                                                                                                    
| | (3) | These funds represent fees for accounting services
      provided to the Registrant.                                                                                                               

The majority of the Registrants executive officers and
directors also serve as officers or directors of other companies or have other
occupations.

With the exception of Mr. Loretto, the Registrant does not pay
regular remuneration to its executive officers. The Registrant pays a private
company wholly owned by the Chief Executive Officer of the Registrant $5,000 per
month to provide executive services for the Registrant on a part-time basis and
additionally as necessary. This contract provides for 12 months notice on any
change in responsibilities for the Chief Executive Officer.

Garth Johnson, a former director and officer of the Registrant,
received wages as shown above through the Registrants subsidiary DLJ Management
Corp., for work relating to accounting, management and regulatory functions of
the Registrant.

No other cash compensation, including salaries, fees,
commissions, and bonuses was paid or is to be paid to the directors and officers
for services rendered, nor was any remuneration paid to directors. The
Registrant currently does not offer profit sharing, pension or retirement
benefit plans to its officers or directors and none are presently proposed.
There are no arrangements for payments on termination for any officer in the
event of a change of control.

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- 17 -

Board Practices

All directors have a term of office expiring at our next annual
general meeting, to be scheduled in January 2007, unless re-elected or unless a
director's office is earlier vacated in accordance with our Articles or the
provisions of the Business Corporations Act (British Columbia).

All officers have a term of office lasting until their removal
or replacement by the board of directors. As of January 28, 2006 the following
are the Registrants officers and directors.

| | Name                                                                     | Period served in position
| | ------------------------------------------------------------------------ | -------------------------
| |                                                                          |                          
| | Peter Loretto (1), President, Chief Executive Officer
      and Director | 20 months                
| |                                                                          |                          
| | Barry MacNeil, Secretary, Chief Executive Officer                        | 15 months                
| | and Director                                                             |                          
| |                                                                          |                          
| | Douglas Lynes (1), Director                                              | 1 month                  
| |                                                                          |                          
| | Michael Hart (1), Director                                               | 6.2 years                
| |                                                                          |                          
| | (1) member of the audit committee                                        |                          

With the exception of Mr. Loretto, there are no Directors
service contracts with the Registrant or any of its subsidiaries providing for
benefits upon the termination of employment. Mr. Loretto is entitled to 12
months notice on any change in responsibilities as Chief Executive Officer.

Audit and remuneration committees

|List of Audit Committee members as at January
      28, 2006:
|-------------------------------------------------------------
|                                                             

Audit Committee members do not have service contracts and are
  not paid for their services as an audit committee member. The committee is constituted
  to monitor the veracity of the financial and regulatory reports produced by
  the Registrant, and the controls that are in place to ensure the opportunities
  for fraud or material error in the financial statements of the Registrant are
  minimized. Please refer to Exhibits for a copy of the Registrants Audit
  Committee Charter.

The Registrant does not have a remuneration committee.
Currently any material commitments, inclusive of remuneration, are required to
be pre-approved by the board of directors.

Employees and Consultants

The Registrant currently has no full-time employees. One person
provides administrative services to the Registrant and is employed through its
wholly owned subsidiary DLJ Management Corp (DLJ) and Mr. Loretto provides his
part-time services as described above.

Share ownership by officers and directors

At July 31, 2005 Mr. Loretto owned 1,206,449 shares (47.94%) of
the Registrant. No other shares were owned by any other directors and officers.

There were no directors and senior officers options granted
or exercised in the years ended July 31, 2005 or 2004 and there were no
outstanding stock options to management.

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- 18 -

The Registrant has no defined plan for involving employees in
the capital of the Registrant. The Registrant may, at the discretion of the
board of directors, grant incentive stock options to its officers, directors,
employees and consultants, for the purchase of shares in the Registrant. Stock
options are in consideration for services and are non-transferable. The Board of
Directors of the Registrant determines the exercise price.

Vesting of options may be made at the time of granting of the
options or over a period of up to five years as set out in each option
agreement. Once approved and vested, options are exercisable at any time until
expiry or termination as above.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED TRANSACTIONS

Major shareholders

Beneficial Holders of More Than Five Percent of Outstanding
Shares

The following schedule sets forth the common stock ownership of
each person known by us to be the beneficial owner of 5% or more of the
Registrants common stock. All ownership shown is of record and reflects
beneficial ownership as of January 28, 2006.

Security Held by Certain Beneficial Owners

|Name and
      Address of Owner |  | Number
      of Shares |  | Percentage
      of Class
|------------------------------- |  | ---------------------- |  | -------------------------
|                                |  |                        |  |                          
|Alex Guidi                      |  | 247,484                |  | 9.83%                    
|Vancouver, B.C.                 |  |                        |  |                          
|                                |  |                        |  |                          
|Peter Loretto                   |  | 1,206,449              |  | 47.94%                   
|Richmond, B.C.                  |  |                        |  |                          

To the knowledge of the Registrant, there have been no
significant changes in percentage share ownership held by any major
shareholders, during the last three years with the exception of Mr. Lorettos
purchase of 1,022,000 shares of the Registrant from the Registrants former
principal shareholder, Mr. Guidi in December of 2003.

Insider Reporting

The Business Corporations Act (British Columbia) does
not prescribe any reporting requirements for insiders of our company. We are a
reporting issuer in British Columbia and insiders comply with the requirements
of Part 12 of the Securities Act (British Columbia). Insiders (generally
officers, directors and holders of more than ten percent of voting securities)
are required to file individual insider reports of changes in their ownership
within ten days after any trade in our securities occurs. Copies of the reports
and summaries of the insider activity as well as issuer activity are available
for public inspection at www.sedi.com, the
Canadian regulatory website for insider trading.

Major Shareholder Voting Right

There are no different voting rights, attributable to the major
shareholders and every shareholder has equal rights.

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- 19 -

Host Country Shareholders

The proportion and number of shareholders in the host country
as at January 20, 2006 are as follows (based on a shareholders list provided by
the Registrants transfer agent):

| | Proportion of shares held in the U.S. | 7.42%  
| | ------------------------------------- | -------
| | Number of shareholders                | 157    
| | Number of shares held                 | 186,793

Arrangements Affecting Shareholdings

There are no known arrangements, which would significantly
affect the control of the major shareholder.

Associated Company/Related Party Shareholdings

At January 28, 2006 Mr. Loretto was a significant shareholder
of Austral and personally held, 735,150 common shares, which represents a 3.24%
ownership interest of Austral on an undiluted basis. In addition, Mr Loretto
beneficially owned, through his controlling interest in the Registrant,
1,584,940 common shares of Austral.

At July 31, 2005, the Registrant was a controlling shareholder
of AMG Oil Ltd. owning 8,200,000 common shares or 49.4% of AMG Oil Ltd. Mr.
Michael Hart is the President, Chief Executive Officer, Corporate Secretary and
a Director of AMG Oil Ltd. On November 29, 2005 the Registrant sold 7,305,500
shares of AMG Oil for proceeds of $73,055. The registrant now owns 894,500
(5.39%) shares of AMG Oil however no longer controls AMG Oil. Mr. Douglas Lynes
is also a director of AMG Oil.

Related Party Transactions

The following are reported as Related Party Transactions. The
nature of the transaction, the affiliate(s) who had an interest in the
transaction and the nature of the interest are included in the description of
each of the transactions:

Subsequent events:

(a) Subsequent to our year end on July 31, 2005, the Registrant
participated in a private placement financing in Austral Pacific after the 2005
fiscal year by acquiring 200,000 units of Austral at $2.50 per unit. Each unit
consists of one share and one half of one share purchase warrant, with each
warrant entitling the Registrant to purchase an additional share at a price of
$3.50 per share for one year subject to an accelerated expiry if a trigger price
of $4.50 is reached in the first twelve months from the issue date. The expiry
of these warrants, if not accelerated is October 13, 2006.

(b) On November 29, 2005, the Registrant sold 7,305,500 shares
of its controlled subsidiary, AMG Oil Ltd. The shares were sold at a price of
$0.01 per share for proceeds of $73,055. The Registrant now holds 894,500 shares
of AMG Oil (5.39%) and as a result no longer controls AMG Oil.

2005:

(c) on April 1, 2005, the Regstrant entered into a consulting
  agreement with a private company wholly-owned by the Chief Executive Officer
  of the Registrant to provide executive services to the Registrant on a part-time
  basis and additionally as necessary. This agreement is for a one-year period,
  extendable for one year if agreed to by both parties with monthly compensation
  of $5,000 per month. This contract provides for 12 months notice on any change
  in responsibilities for the Chief Executive Officer.

(d) The Registrant received net proceeds of $2,216,479 from
selling 788,800 shares of Austral Pacific, with a carrying value of $998,160,
resulting in a gain on sale amounting to $1,218,319.

(e) AMG Oil also sold 2,205 shares of the Registrant for
proceeds of $3,308, with a carrying value of $11,993, resulting in a loss over
carrying value of $8,685.

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- 20 -

(f) The Registrant acquired 836,845 shares of Austral Pacific
at a price of $1.50 per share through the exercise of share purchase warrants
and a acquired another 382,750 shares of Austral Pacific at a price of NZ$2.10
per share through the exercise of share purchase warrants.

(g) During the 2005 fiscal year, the Registrant paid $3,589
(2004: $9,056) for wages and benefits to a former director of the Registrant and
the Registrant paid $2,135 (2004: Nil) for hourly consulting fees to a current
director of the Registrant.

(h) Since July 1, 2003, Austral has paid $1,500 per month to
DLJ Management Corp., a wholly owned subsidiary of the Registrant, for a portion
of DLJs overhead in relation to work performed by DLJ on Australs behalf. The
arrangement can be terminated by either party on 30 days notice.

(i) During the 2005 fiscal year, the Registrants wholly owned
subsidiary, DLJ Management Corp., provided corporate services consisting of
accounting and administrative services to AMG Oil Ltd., Austral Pacific Energy
Ltd., and TAG Oil Ltd. DLJ Management Corp. billed these companies on a cost
recovery basis, the amount of which was determined by the amount of time devoted
by DLJ Management Corp.s staff to each company. These amounts were as follows
in CAD$: $18,000 (2004: $18,000), $9,268 (2004: $21,259), $141,847 (2004:
$117,192) to Austral, AMG and TAG, respectively.

2004:

(j) On December 4, 2003, the Registrant sold 725,000 shares of
its investment in Austral with a book value of $442,250 or $0.61 per share, for
$903,353, a price averaging approximately $1.25 per share, resulting in a gain
over carrying value of $461,103. The Registrant then replaced these shares on
December 11, 2003 by participating in Australs initial public offering to list
on the New Zealand Stock Exchange. The Registrant acquired 765,500 units in
Austral at a price of $1.30 (NZ$2.00), per unit. Each unit consists of one
common share and a half share purchase warrant exercisable at a price of $1.37
(NZ$2.10) until January 5th, 2005. The Registrant also reached an agreement with
Austral to amend the Registrants 836,845 Series A warrants, mentioned in (p)
below. The Series A warrants expiry date was extended for one year to January
5th, 2005 in consideration of the Registrant renouncing the Series B warrant
in to which the Series A originally (converted together with a common share) as
well as increasing the exercise price of the Series A warrants by $0.10 to
$1.50 per Austral common share.

(k) During the 2004 fiscal year, the Registrant also sold an
additional 93,500 shares of Austral, with a carrying value of $113,770 or $1.22
per share, for $181,598 or $1.94 per share, resulting in a gain over carrying
value of $67,828.

(l) During the 2004 fiscal year, the Registrant issued 100,000
shares of the Registrants capital stock, resultant from the exercise of share
purchase warrants. This issuance included the Registrants President (12,500)
and other individuals related to the Registrant. The Registrant also extended
the expiry date of the remaining share purchase warrants to June 13, 2005. These
warrants expired unexercised during the 2005 fiscal year.

2003:

(m) On March 4, 2003, the Registrant acquired a 49.4%
controlling interest in AMG Oil Ltd. (AMG) resultant from AMG re-purchasing
3,000,000 shares of its own common stock for cancellation and return to
treasury. As a result of the Registrant acquiring a controlling interest in AMG,
the Registrant has therefore reported its investment in AMG on a consolidated
basis for the Period from March 4, 2003 to July 31, 2004. (until sold on
November 29, 2005)

(n) During the 2003, fiscal year, the Registrant sold 119,800
shares (2002: 59,900 shares) of Austral with a carrying value at that time of
$88,652 (2002: $67,075), for cash proceeds of $98,706 (2002: $76,908), resulting
in a gain of $10,054 (2002: $9,833).

(o) On September 6, 2002, the Registrant acquired, by way of
private placement, 175,000 units of Austral at $0.80 per unit. Each unit
consists of one common share and share purchase warrant, exercisable at $0.90 in
the first year and $1.15 in year two.

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- 21 -

Interests of experts and counsel

Not applicable

ITEM 8. FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

Consolidated financial statements are provided under PART III. Item 17. FINANCIAL STATEMENTS

There are no material legal proceedings to which the Registrant is subject or which are anticipated or threatened.

The Registrant has never paid dividends to shareholders nor is there a policy in place to do so. All cash flow derived by the Registrant is re-invested in the Registrants operations.

Significant Changes

The registrant acquired 500,000 shares of TAG Oil through the exercise of its 500,000 share purchase warrants at a price of $0.60 per share. The Registrant then sold 1,000,000 shares of TAG Oil with a cost of $500,000 for proceeds of
$1,141,581 for a gain over book value of $641,581.

The Registrant also participated in a private placement financing in Austral Pacific after the 2005 fiscal year by acquiring 200,000 units of Austral at $2.50 per unit. Each unit consists of one share and one half of one share purchase warrant,
with each warrant entitling the Registrant to purchase an additional share at a price of $3.50 per share for one year subject to an accelerated expiry if a trigger price of $4.50 is reached in the first twelve months from the issue date. The
expiry of these warrants, if not accelerated is October 13, 2006.

On November 29, 2005, the Registrant sold 7,305,500 shares of its controlled subsidiary, AMG Oil Ltd. The shares were sold at a price of $0.01 per share for proceeds of $73,055. The Registrant now holds 894,500 shares of AMG Oil (5.39%) and
as a result no longer controls AMG Oil.

At the Registrants annual and special meeting held on January 12, 2006, the shareholders approved the continuation of the jurisdiction of the Registrant out of the Yukon Territory and back into British Columbia. The continuation, which became
effective on January 16, 2006, was precipitated by the adoption in British Columbia of a new corporation law statute, the Business Corporations Act (British Columbia) (the New BC Act), in 2004. The New BC Act modernizes corporate
law in British Columbia. In particular, it removes residency requirements for directors and provides greater flexibility in establishing the relative powers and authorities between directors and shareholders.  In addition, the shareholders approved
the creation of a new class of preferred shares without par value and without a maximum authorized number, issuable in series, on such terms as may be determined by the Registrants directors for each such series. There are no current
agreements or intentions to issue any Preferred Shares but the Board believed that it was appropriate to obtain shareholder approval to create the Preferred Shares as a convenient matter to be dealt with in connection with the continuation of the
Registrant under the New BC Act.

In connection with the continuation of the Registrant under the New BC Act, the Registrant has adopted new Articles which permit the directors to authorize, without further shareholder approval, name changes and share consolidations and share
subdivisions. The proxy solicitation materials furnished to the shareholders in connection with the annual and special meeting held on January 12, 2006 disclosed that: (a) the directors may elect to eliminate odd lot shareholders by effecting a
100:1 stock consolidation (reverse split) followed by an immediate 1:100 share subdivision (stock split); (b) any shareholder who, after the 100:1 share consolidation holds less than one share will be paid in cash the value of that fractional share;
(c) the purpose of the stock consolidation (reverse split) and immediately following stock split would be to eliminate a significant number of shareholders who hold less than a 100 shares of the Registrant, given the significant additional costs of
mailing and other regulatory compliance for these extremely small shareholdings that must be borne by the Registrant on an annual basis; and (d) management is not be obligated to proceed with the elimination of odd lots if in its discretion it
decides against the transaction. As of the date hereof, management has not made any decision in this regard.

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- 22 -

No other significant changes material to the business of the
Registrant has occurred since the date of the annual financial statements.

ITEM 9. THE OFFER AND LISTING

Offer and Listing Details

There is no offering of stock hereunder. This is an annual
report only.

Price History of the stock

The Registrant voluntarily delisted its shares from the
Canadian Venture Exchange (CDNX) in Vancouver, British Columbia, Canada on
July 31, 1997. The Registrants shares commenced trading on the OTC Bulletin
Board (OTCBB) on June 10, 1997, under the symbol TEPUF. The trading symbol
was subsequently changed to TOPXF on March 1, 2001, concurrent with the 1 for
12 share consolidation approved by the Registrants shareholders on January 17,
2001. Concurrent with a further 1 for 3 share consolidation approved by
shareholders on January 18, 2002 the Registrants symbol was changed to TOPTF
on the effective date of the consolidation being April 4, 2002. On May 26, 2004
the Registrants symbol was changed to TOPLF.

All values noted below are in US dollars per share:

Summary trading by year, for the five most recently competed
fiscal periods ending July 31, 2005.

OTCBBYear
    High (1,2)
    Low (1,2)2001
    1.01
    0.032002
    1.01
    0.122003
    1.52
    0.352004
    0.90
    0.102005
    6.00
    0.44


Summary trading by quarter for the two most recently competed
fiscal periods ending July 31, 2005.

OTCBBYear and Quarter
    High (1,2)
    Low (1,2)2004First Quarter
    0.51
    0.26Second Quarter
    0.55
    0.10Third Quarter
    0.90
    0.32Fourth Quarter
    0.75
    0.442005First Quarter
    6.00
    0.40Second Quarter
    2.00
    1.16Third Quarter
    2.40
    1.12Fourth Quarter
    2.00
    1.10


Summary trading by quarter for any full quarter subsequent to
the year end July 31, 2005

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- 23 -

OTCBBFirst Quarter
    High (1,2)
    Low (1,2)Aug 1 to Oct 31,
    2.00
    1.202005


Summary trading by month for the six most recently completed
months ending December 31, 2005

OTCBBMonth
    High (1,2)
    Low (1,2)July 2005
    1.45
    1.10August 2005
    1.45
    1.20September 2005
    2.00
    1.40October 2005
    1.75
    1.50November 2005
    1.75
    1.25December 2005
    2.00
    1.05


(1) OTCBB quotations may reflect interdealer prices, without
  retail Markup, mark-down or commission and may not necessarily reflect actual
  transactions.
  (2) All quotations are from the Yahoo Finance website located at www.yahoo.com.

Plan of Distribution

Not applicable

Markets

The authorized capital of the Registrant consists of an
unlimited number of Common Shares without par value, of which 2,516,869 Common
Shares were issued on July 31, 2005 and January 28, 2006.

The Registrants shares trade on the OTC Bulletin Board
(OTCBB) under the symbol TOPLF.

ITEM 10. ADDITIONAL INFORMATION

Share Capital

Not applicable

Memorandum and Articles of Association

Incorporation

The Registrant was incorporated on July 25, 1986 under the name
Palo Duro Exploration Ltd. by the registration of memorandum and articles under
the Company Act (British Columbia). The Registrant changed its name to
Stoney Creek Mines Ltd. on July 15, 1988 and to Cyn-Tech Ventures Ltd. on June
30, 1992. On June 29, 1995 the Registrant changed its name to Consolidated
Cyn-Tech Ventures Ltd. On June 27, 1996 the changed its name to Trans-Orient
Petroleum Ltd. On September 26, 1997 the Registrant was continued from a company
subsisting under the Company Act (British Columbia) to a company
subsisting under the Business Corporations Act (Yukon).

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- 24 -

On January 16, 2006 the Registrant was continued out of the jurisdiction of the Yukon Territory and into British Columbia. It is now a company subsisting under Business Corporations Act (British Columbia) (the New BC Act) which
replaced the Company Act (British Columbia) in 2004. The Registrants Notice of Articles has been filed with the British Columbia Registrar of Companies under the New BC Act, and constitutes the primary charter document of the
Registrant. The Registrant has also adopted the new Articles in the form approved by the shareholders at the annual and special meeting held on January 12, 2006, which replace the Registrants former by-laws. See also Item 4 of this Annual
Report under the heading History and Development of the Registrant.

The Registrant is entitled under the New BC Act to carry on all lawful businesses which can be carried on by a natural person.

The following is a summary of certain material provisions of the Registrants Notice of Articles and Articles and certain provisions of the New BC Act applicable to the Registrant:

Directors

Directors power to vote on a proposal, arrangement or contract in which the director is interested.

The Articles provide that when a director holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or
interest as a director (i.e., a disclosable interest), he must declare the nature and extent of his interest in such contract or transaction or of any other possible conflict, in accordance with the provisions of the New BC Act. A director who holds
a disclosable interest may not vote on the transaction but will be counted in the quorum present at the meeting at which such vote is taken.

According to the New BC Act, a director holds a disclosable interest in a contract or transaction if:

- the contract or transaction is material to the company;
- the company has entered, or proposes to enter, into the contract or transaction, and
- either of the following applies to the director:
- the director has a material interest in the contract or transaction; or
- the director is a director or senior officer of, or has a material interest in, a person who has a material interest in the contract or transaction.

However, the New BC Act also provides that in the following circumstances, a director does not hold a disclosable interest in a contract or transaction:

- where the situation that would otherwise constitute a disclosable interest arose before the coming into force of the New BC Act or, if the company was recognized under the New BC Act, before that recognition, and was disclosed and approved under, or
was not required to be disclosed under, the legislation that:
- applied to the company on or after the date on which the situation arose; and
- is comparable in scope and intent to the provisions of the New BC Act;
- where both the company and the other party to the contract or transaction are wholly owned subsidiaries of the same corporation;
- where the company is a wholly owned subsidiary of the other party to the contract or transaction;

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- 25 -

- where the other party to the contract or transaction is a wholly owned subsidiary of the company; or
- where the director or senior officer is the sole shareholder of the company or of a corporation of which the company is a wholly owned subsidiary.

The New BC Act further provides that a director of a company does not hold a disclosable interest in a contract or transaction merely because:

- the contract or transaction is an arrangement by way of security granted by the company for money loaned to, or obligations undertaken by, the director or senior officer, or a person in whom the director or senior officer has a material interest,
for the benefit of the company or an affiliate of the company;
- the contract or transaction relates to an indemnity or insurance;
- the contract or transaction relates to the remuneration of the director or senior officer in that person's capacity as director, officer, employee or agent of the company or of an affiliate of the company;
- the contract or transaction relates to a loan to the company, and the director or senior officer, or a person in whom the director or senior officer has a material interest, is or is to be a guarantor of some or all of the loan; or
- the contract or transaction has been or will be made with or for the benefit of a corporation that is affiliated with the company and the director or senior officer is also a director or senior officer of that corporation or an affiliate of that
corporation.

Directors' power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body.

The compensation of the directors is decided by the directors unless the board of directors requests approval to the compensation from the shareholders. The quorum for the transaction of the business of the directors may be set by the directors and,
if not so set, is deemed to be a majority of the directors.

Borrowing powers exercisable by the directors.

The directors may, on behalf of the Company:

- borrow money in such manner and amount, on such security, from such sources and upon such terms, and conditions as they consider appropriate;
- issue bonds, debentures, and other debt obligations either outright or as a security for any liability or obligation of the Registrant or any other person and at such discounts or premiums and on such other terms as they consider appropriate;
- guarantee the repayment of money by any other person or the performance of any obligation or any other person; and
- mortgage, charge or give other security on the undertaking, or on the whole or any part of the property and assets, of the Registrant (both present and future).

Retirement and non-retirement of directors under an age limit requirement.

There are no such provisions applicable to the Registrant under its Notice of Articles or Articles.

Number of shares required for a directors qualification.

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- 26 -

A director of the Registrant is not be required to hold a share in the capital of the Registrant as qualification for his or her office.

Alternate Directors

The New Articles permit a director to appoint anyone as his or her alternate, as long as that person is qualified to act as a director.

Indemnity Provisions

Under the New BC Act, the Registrant is permitted (and is, in some circumstances, required) to indemnify a past or present director or officer of the Registrant or an associated corporation without obtaining prior court approval in respect of an
eligible proceeding. An eligible proceeding includes any legal proceeding relating to the activities of the individual as a director or officer of the Registrant.  However, under the New BC Act, the Registrant will be
prohibited from paying an indemnity if:

- the party did not act honestly and in good faith with a view to the best interests of the Registrant;
- the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and
- the proceeding is brought against the party by the Registrant or an associated corporation.

As a result, the Articles require the Registrant to indemnify directors, officers and other persons, subject to the limits imposed under the New BC Act.

Officers

Under the Registrants Articles the board of directors may, from time to time, appoint such officers as they may determine, other than a Chief Executive Officer and a Chief Financial Officer as required by the regulatory authorities.

Elimination of Fractional Shares

The Articles permit the Registrant to either round up or round down any fractional shares resulting from a share consolidation (reverse-split) or share subdivision (share split) or alternative to unilaterally cause the purchase for cancellation of
any outstanding fractional shares of the Registrant by paying the holder thereof its fair value.

Rights, Preferences And Restrictions Attaching To Each Class Of Shares

The authorized capital of the Registrant consists of an unlimited number of common shares and preferred shares, in each case without nominal or par value. As at January 28, 2005, there were 2,516,869 common shares and no preferred shares issued and
outstanding.

There are no indentures or agreements existing or proposed limiting the payment of dividends and there are no special liquidation rights or pre-emptive rights. The presently outstanding share capital is not subject to any call or assessment, all
having been issued as fully paid and non-assessable.

With respect to the rights, preferences and restrictions attaching to the Registrants common shares, there are generally no significant differences between Canadian and United States law as the shareholders, or the applicable corporate
statute, will determine the rights, preferences and restrictions attaching to each class of the Companys shares.

The directors of the Registrant may issue the preferred shares in one or more series. In addition, the directors may, by resolution, alter the Notice of Articles to fix the number of shares in, and to determine the designation of the shares of, each
series. The directors may also, by resolution, alter the Notice of Articles to create, define and attach special rights

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and restrictions to the shares of each series, subject to the following special rights and restrictions attaching to the preferred shares under the Registrants Articles:

- The holders of the preferred shares are entitled to receive notices of and to attend and vote at all meetings of the shareholders of the Registrant in the same manner and to the same extent as are the holders of the common shares;
- The holders of the preferred shares are entitled to receive dividends as and when they are declared by the board of directors, and the directors are empowered, upon agreeing to sell a preferred share, to contract as to the rate of dividend which
will be paid on the share, if any, how often the dividends are to be paid, whether they are to be accumulative, and whether the rate is to be fixed for the life of the share or to be subject to declaration by the board of directors each year;
- The holders of the preferred shares are entitled to exchange them for common shares in of the Registrant; provided that when the directors agree to the issuance of any preferred shares they shall be entitled to specify the terms, conditions and
rates during which and upon which the holders of the preferred shares will be entitled to exercise such conversion privileges;
- The Registrant may, upon giving not less than 30 days written notice, redeem the whole or any part of the preferred shares on payment for each share to be redeemed of the amount paid up thereon, together with all dividends declared thereon and
unpaid; provided that in the case of a redemption of a part of the then outstanding preferred shares, the shares to be redeemed will be selected by lot in such manner as the directors in their discretion shall decide or, if the directors so
determine, will be redeemed on a pro rata basis; and
- The preferred shares will rank, both as regards dividends and return of capital, in priority to all other shares of the Registrant, but will not be entitled to any further right to participate in the profits or assets of the Registrant.

In the event of the liquidation, dissolution or winding-up of the Registrant, the holders of the preferred shares will be entitled to receive, before any distribution of any part of the property and assets of the Registrant among the holders of any
other shares, an amount equal to 100% of the amount paid thereon and any dividends declared thereon and unpaid.

Amendment of Articles and Notice of Articles

The New BC Act provides that a company may, by the type of shareholders' resolution specified by the articles, or, if the articles do not specify the type of resolution, by a special resolution:

- create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or
- vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

The Articles provide that the general authority required to amend all provisions of the Registrants Articles, and the Notice of Articles, other than as set out below, is a special resolution. The Registrant may by resolution of the directors
authorize an alteration of its Notice of Articles in order to change its name or to adopt or change any translation of that name.  The Registrant may also amend certain provisions of the Articles and Notice of Articles relating to the authorized
share structure (including a reverse split or a share split) by a resolution of the directors or by an ordinary resolution. The default provision under the New BC Act calls for a special resolution.

The Articles also provide that the attachment, variation and deletion of special rights and restrictions to any class of shares must be authorized by ordinary resolution. If the amendment prejudices or interferes with the rights or special rights
attached to any class of issued shares, by the provisions of the New BC Act, the consent of the holders of that class of shares by a special separate resolution is also required.

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A special resolution requires a majority of two-thirds of the votes cast.

The New BC Act also provides that the Registrant may reduce its capital if it is authorized to do so by a court order, or, if the capital is reduced to an amount that is not less than the realizable value of the company's assets less its
liabilities, by a special resolution or court order.

Generally, there are no significant differences between British Columbia and United States law with respect to changing the rights of shareholders as most state corporation statutes require shareholder approval (usually a majority) for any such
changes that affect the rights of shareholders.

Meetings Of Shareholders

The Registrant must hold its annual general meeting once in every calendar year (being not more than 15 months from the last annual general meeting) at such time and place to be determined by the directors of the Registrant.  The Registrant must
publish an advance notice in the manner required by the New BC Act of any general meeting at which directors are to be elected. The directors may fix in advance a date, which is no fewer than 21 days prior to the date of the meeting. All the holders
of common shares as at that date are entitled to receive notice of and to attend and vote at a general meeting. The Articles provide that the quorum for the transaction of business at any meeting of shareholders is two person who are, or who
represent by proxy, shareholders who, in the aggregate, hold at least 10% of the issued shares entitled to be voted at the meeting.

The Articles permit the giving of notice to shareholders, directors and officers by fax or e-mail in addition to regular mail or personal delivery.

Most state corporation statutes require a public company to hold an annual meeting for the election of directors and for the consideration of other appropriate matters. The state statutes also include general provisions relating to shareholder
voting and meetings. Apart from the timing of when an annual meeting must be held and the percentage of shareholders required to call an annual meeting or an extraordinary meeting, there are generally no material differences between Canadian and
United States law respecting annual meetings and extraordinary meetings.

Restrictions On Changes In Control, Mergers, Acquisitions Or Corporate Restructing Of The Company

There are no provisions in the Registrants Notice of Articles or Articles that would have the effect of delaying, deferring or preventing a change in control of the Registrant or that would operate only with respect to a merger, acquisition or
corporate restructuring involving the Registrant.

The New BC Act does not contain any provisions that would have the effect of delaying, deferring or preventing a change of control of the Registrant.

Generally, there are no significant differences between British Columbia and United States law in this regard, as many state corporation statutes also do not contain such provisions and only empower a companys board of directors to adopt such
provisions.

Ownership Threshold Requiring Public Disclosure

There are no provisions in the Registrants Notice of Articles or Articles or in the New BC Act governing the threshold above which shareholder ownership must be disclosed. The Registrant is a reporting company under the Securities Act(British Columbia).  As a reporting company, provincial securities legislation requires that a shareholder disclose ownership of 10% or more of the shares (and any further increases of 2% or more) of the Registrant by issuing a news release and
filing a report (both containing prescribed disclosure) with the Securities Commissions in those provinces. They also require the Registrant disclose, in its proxy circular sent out for an annual meeting or special meeting, the names of holders
known to the Registrant to beneficially own more than 10% of the Registrants issued and outstanding shares.

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Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. United States federal securities laws require a company that is subject to the reporting requirements of the
Securities Exchange Act of 1934 to disclose, in its annual reports filed with the Securities and Exchange Commission those shareholders who own more than 5% of a corporations issued and outstanding shares.

Dividend Record

The Registrant has not paid any dividends on its common shares and has no policy with respect to the payment of dividends.

Changes In The Capital Of The Registrant

There are no conditions imposed by the Registrants Notice of Articles or Articles which are more stringent than those required by the New BC Act.

Material contracts

Attached as Exhibits in Item 19 is a list of material contracts the Registrant entered into during the period from the Registrants fiscal year ended July 31, 2003 up to January 28, 2006. All material contracts are filed under Form 6-K or with
previous Annual reports under form 20F as noted in Item 19.

Exchange Controls

There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares of the Registrant, other than
withholding tax requirements. See Taxation.

There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Registrant on the right of a non-resident to hold or vote common shares of the Registrant, other than as provided in the Investment Canada Act
(Canada) (the Investment Act).

The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire common shares of the Registrant. It is general only, it is not a substitute for independent advice from an investors
own advisor, and it does not anticipate statutory or regulatory amendments.

The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an entity) that is not a Canadian as
defined in the Investment Act (a non-Canadian), unless after review the Director of Investments appointed by the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. The
size and nature of a proposed transaction may give rise to an obligation to notify the Director and seek an advance ruling. An investment in common shares of the Registrant by a non-Canadian other than a WTO Investor (as defined in the
Investment Act and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when the Registrant was not controlled by a WTO Investor, would be reviewable under the
Investment Act if it was an investment to acquire control of the Registrant and the value of the assets of the Registrant, as determined in accordance with the regulations promulgated under the Investment Act, was over a certain figure, or if an
order for review was made by the federal cabinet on the grounds that the investment related to Canadas cultural heritage or national identity, regardless of the value of the assets of the Registrant. An investment in common shares of the
Registrant by a WTO Investor, or by a non-Canadian when the Registrant was controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of the Registrant and the value of the assets of the
Registrant, as determined in accordance with the regulations promulgated under the Investment Act, exceeds a specified amount, which in 2006 is CAD$265 million (2005: CAD$250 million; 2004: CAD$237 million). A non-Canadian would acquire
control of the Registrant for the purposes of the Investment Act through acquisition of common shares if the non-Canadian acquired a majority of the common shares of the Registrant. The acquisition of less than a majority but one third or more of
the common shares of the Registrant would be presumed

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to be an acquisition of control of the Registrant unless it could be established that, on the acquisition, the Registrant was not controlled in fact by the acquirer through the ownership of common shares.

Certain transactions relating to common shares of the Registrant would be exempt from the Investment Act, including

(a) acquisition of common shares of the Registrant by a person in the ordinary course of that persons business as a trader or dealer in securities,

(b) acquisition of control of the Registrant in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the Investment Act, and

(c) acquisition of control of the Registrant by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Registrant, through the ownership of common shares,
remained unchanged.

Taxation

Canadian Tax Consequences

The following summarizes the material Canadian federal income tax consequences generally applicable to the holding and disposition of Common Shares by a holder (in this summary, a U.S. Holder) who, (a) for the purposes of the Income Tax
Act (Canada) (the Tax Act), is not resident in Canada, deals at arms length with the Registrant, holds the Common Shares as capital property and does not use or hold the Common Shares in the course of carrying on, or otherwise in
connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention, 1980 (the Treaty), is a resident solely of the United States, has never been a resident of Canada, and has not held or
used (and does not hold or use) Common Shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, limited liability companies, tax-exempt entities, insurers,
financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or any other U.S. Holder to which special considerations apply.

This summary is based on the current provisions of the Tax Act including all regulations thereunder, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by the Government of Canada to the date
hereof, and the current administrative practices of the Canada Customs and Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or
administrative practice, although no assurances can be given in these respects. The immediately following summary does not take into account Canadian provincial, U.S. federal (which follows further below), state or other foreign income tax law or
practice. The tax consequences to any particular U.S. Holder will vary according to the status of that holder as an individual, trust, corporation, partnership or other entity, the jurisdictions in which that holder is subject to taxation, and
generally according to that holders particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder.

Dividends

Dividends paid or deemed to be paid to a U.S. Holder by the Registrant will be subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross amount of
the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns at least 10% of the Registrants voting shares). the Registrant will be required to withhold the applicable withholding tax from any such dividend and remit it to the
Canadian government for the U.S. Holders account.

Disposition

A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a Common Share in the open market unless the share is taxable Canadian property to the holder thereof and the U.S. Holder
is not entitled to relief under the Treaty. A common share will be taxable Canadian property to a U.S. Holder if, at any time during the 60 months preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder did

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not deal at arms length alone or together owned, or had rights to acquire, 25% or more of the Registrants issued shares of any class or series.

A U.S. Holder whose common shares do constitute taxable Canadian property, and who might therefore be liable for Canadian income tax under the Tax Act, will generally be relieved from such liability under the Treaty unless the value of such shares
at the time of disposition is derived principally from real property situated in Canada. The value of the Registrants common shares is not currently derived principally from real property situated in Canada.

United States Tax Consequences

United States Federal Income Tax Consequences

The following summarizes the material United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of common shares of the Registrant. This discussion does not address all
potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In
addition, this discussion does not cover any state, local or foreign tax consequences. (see Taxation  Canadian Federal Income Tax Consequences above). Accordingly, holders and prospective holders of common shares of the Registrant
should consult their own tax advisors about the specific federal, state, local, and foreign tax consequences to them of purchasing, owning and disposing of common shares of the Registrant, based upon their individual circumstances.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of
the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not
consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used herein, a U.S. Holder means a holder of common shares of the Registrant who is a citizen or individual resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or
of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as
described Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified
retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or
entities that have a functional currency other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who
acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own common shares as capital assets and who own (directly and indirectly, pursuant to
applicable rules of constructive ownership) no more than 5% of the value of the total outstanding stock of the Registrant. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences
to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares. In addition, this summary does not address special rules applicable to United States persons (as defined in Section 7701(a)(30)
of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.

Distribution on Common Shares

In general, U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Registrant are required to include in gross income for United States federal income tax purposes the gross amount of
such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the

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exchange rate on such date), to the extent that the Registrant has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to
certain limitations, against the U.S. Holders federal income tax liability or, alternatively, may be deducted in computing the U.S. Holders federal taxable income by those who itemize deductions. (See more detailed discussion at
Foreign Tax Credit below). To the extent that distributions exceed current or accumulated earnings and profits of the Registrant, they will be treated first as a return of capital up to the U.S. Holders adjusted basis in the common
shares and thereafter as gain from the sale or exchange of property. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for
long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of
receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed
$200 will not recognize that gain, provided that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or
as an expense for the production of income.

Dividends paid on the common shares of the Registrant generally will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation and
which owns shares representing at least 10% of the voting power and value of the Registrant may, under certain circumstances, be entitled to a 70% (or 80% if the U.S. Holder owns shares representing at least 20% of the voting power and value of the
Registrant) deduction of the United States source portion of dividends received from the Registrant (unless the Registrant qualifies as a foreign personal holding company or a passive foreign investment company, as defined
below). the Registrant does not anticipate that it will earn any United States income, however, and therefore does not anticipate that any U.S. Holder will be eligible for the dividends received deduction.

Under current Treasury Regulations, dividends paid on the Registrants common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the
proceeds from a sale of the Registrants common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup
withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holders U.S. federal
income tax liability, provided the required information is furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Registrant may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for
such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income
subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among
which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders United States income tax liability that the U.S. Holders foreign source income bears to his or its worldwide taxable income. In the
determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated
separately with respect to specific classes of income such as passive income,  high withholding tax interest, financial services income, shipping income, and certain other classifications of income.
Dividends distributed by the Registrant will generally constitute passive income or, in the case of certain U.S. Holders, financial services income for these purposes. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific, and U.S. Holders of common shares of the Registrant should consult their own tax advisors regarding their individual circumstances.

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Disposition of Common Shares of the Registrant

In general, U.S. Holders will recognize gain or loss upon the sale of common shares of the Registrant equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the
shareholders tax basis in the common shares of the Registrant. Preferential tax rates apply to long-term capital gains of U.S. Holders which are individuals, estates or trusts. In general, gain or loss on the sale of common shares of the
Registrant will be long-term capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S.
Holders which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations
subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted. However the
amount that can be carried back is limited to an amount that does not cause or increase a net operating loss in the carry back year.

Other Considerations

Set forth below are certain material exceptions to the above-described general rules describing the United States federal income tax consequences resulting from the holding and disposition of common shares:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Registrants outstanding shares is owned, directly or indirectly (pursuant to applicable rules of constructive ownership), by five
or fewer individuals who are citizens or residents of the United States and 60% or more of the Registrants gross income for such year is derived from certain passive sources (e.g., from certain interest and dividends), the Registrant may be
treated as a foreign personal holding company. In that event, U.S. Holders that hold common shares would be required to include in gross income for such year their allocable portions of such passive income to the extent the Registrant
does not actually distribute such income. the Registrant does not believe that it currently qualifies as a foreign personal holding company. However, there can be no assurance that the Registrant will not be considered a foreign personal holding
company for the current or any future taxable year.

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Registrants outstanding shares is held, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or
trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and the Registrant is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein,
it is possible that the Registrant may be treated as a foreign investment company as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares to be treated as
ordinary income rather than capital gain. the Registrant does not believe that it currently qualifies as a foreign investment company. However, there can be no assurance that the Registrant will not be considered a foreign investment company for the
current or any future taxable year.

Passive Foreign Investment Company

United States income tax law contains rules governing passive foreign investment companies (PFIC) which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders.
Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States if, for any taxable year, either (i) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents
and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for
the production of passive income is 50% or more. the Registrant appears to have been a PFIC for the fiscal year ended July 31, 2000, and at least certain prior fiscal years. In addition, the Registrant expects to qualify as a PFIC for
the fiscal

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year ending July 31, 2001 and may also qualify as a PFIC in future fiscal years. Each U.S. Holder of the Registrant is urged to consult a tax advisor with respect to how the PFIC rules affect such U.S. Holders tax situation.

Each U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of three alternative tax regimes at the election of such U.S.
Holder. The following is a discussion of such alternative tax regimes applied to such U.S. Holders of the Registrant. In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a controlled foreign corporation
(as defined below) and a U.S. Holder owns, actually or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (See more detailed discussion at Controlled Foreign
Corporation below).

A U.S. Holder who elects to treat the Registrant as a qualified electing fund (QEF) will be subject, under Section 1293 of the Code, to current federal income tax for any taxable year to which the election applies in which the Registrant
qualifies as a PFIC on his pro rata share of the Registrants (i) net capital gain (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain, and (ii) ordinary
earnings (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income, in each case, for the shareholders taxable year in which (or with which) the Registrants taxable year ends, regardless of
whether such amounts are actually distributed. A U.S. Holders tax basis in the common shares will be increased by any such amount that is included in income but not distributed.

The procedure a U.S. Holder must comply with in making an effective QEF election, and the consequences of such election, will depend on whether the year of the election is the first year in the U.S. Holders holding period in which the
Registrant is a PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a timely QEF election, then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files
his tax return for such first year. If, however, the Registrant qualified as a PFIC in a prior year during the U.S. Holders holding period, then, in order to avoid the Section 1291 rules discussed below, in addition to filing documents, the
U.S. Holder must elect to recognize under the rules of Section 1291 of the Code (discussed herein), (i) any gain that he would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if the Registrant is a controlled
foreign corporation, the U.S. Holders pro rata share of the Registrants post-1986 earnings and profits as of the qualification date. The qualification date is the first day of the Registrants first tax year in which the Registrant
qualified as a QEF with respect to such U.S. Holder. For purposes of this discussion, a U.S. Holder who makes (i) a timely QEF election, or (ii) an untimely QEF election and either of the above-described gain-recognition elections under Section 1291
is referred to herein as an Electing U.S. Holder. A U.S. Holder who holds common shares at any time during a year of the Registrant in which the Registrant is a PFIC and who is not an Electing U.S. Holder (including a U.S. Holder who
makes an untimely QEF election and makes neither of the above-described gain-recognition elections) is referred to herein as a Non-Electing U.S. Holder. An Electing U.S. Holder (i) generally treats any gain realized on the disposition of
his Registrant common shares as capital gain; and (ii) may either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the
Registrants annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the U.S. Holder is not a corporation, any interest charge imposed under the PFIC regime would be treated as personal
interest that is not deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF election, the Registrant must provide certain information regarding its net capital gains and ordinary earnings and permit its books and records to be examined to verify such information.
the Registrant intends to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to the Registrant. the Registrant urges each U.S. Holder to consult a tax advisor regarding the
availability of, and procedure for making, the QEF election.

A QEF election, once made with respect to the Registrant, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to revocation of the election. If a QEF
election is made by a U.S. Holder and the Registrant ceases to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which the Registrant does not qualify as a PFIC.
Therefore, if the Registrant again qualifies as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax
years in which the Registrant qualifies as a PFIC. In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of

---

- 35 -

his or its direct and indirect interest in the shares of the Registrant. Therefore, if such U.S. Holder reacquires an interest in the Registrant, that U.S. Holder will be subject to the rules described above for Electing U.S. Holders for each tax
year in which the Registrant qualifies as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his Registrant common shares and (ii) certain
excess distributions, as defined in Section 1291(b), by the Registrant.

A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of his Registrant common shares and all excess distributions on his Registrant common shares over the entire holding period for the common
shares. All gains or excess distributions allocated to prior years of the U.S. Holder (excluding any portion of the holders period prior to the first day of the first year of the Registrant (i) which began after December 31, 1986, and (ii) for
which the Registrant was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year
calculated as if such liability had been due with respect to each such prior year. A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as personal interest which, as discussed above, is wholly
non-deductible. The balance, if any, of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance. In certain
circumstances, the sum of the tax and the PFIC interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the U.S. Holder.

If the Registrant is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Registrant common shares, then the Registrant will continue to be treated as a PFIC with respect to such Registrant common shares, even if it is no longer
definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Registrant common shares had been
sold on the last day of the last taxable year for which it was a PFIC.

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold (actually or constructively) marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market annually (a
mark-to-market election). If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However, if the mark-to-market election is made by a Non-Electing U.S.
Holder after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to the Registrant common shares. A U.S. Holder who makes
the mark-to-market election will include in income for each taxable year for which the election is in effect an amount equal to the excess, if any, of the fair market value of the common shares of the Registrant as of the close of such tax year over
such U.S. Holders adjusted basis in such common shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holders adjusted tax basis in the common shares over the fair market value
of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for the common shares in the Registrant included by such U.S. Holder for prior tax years, including any amount which would have been treated
as a mark-to-market gain for any prior tax year but for the Section 1291 rules discussed above with respect to Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years. A U.S.
Holders adjusted tax basis in the common shares of the Registrant will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the taxable year in
which the election is made and to each subsequent taxable year, unless the Registrant common shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. Because the IRS has not established procedures
for making a mark-to-market election, U.S. Holders should consult their tax advisor regarding the manner of making such an election. No view is expressed regarding whether common shares of the Registrant are marketable for these purposes or whether
the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such
as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases the basis of the Registrant common shares in the hands of the transferee and the basis of any property received in the exchange for those
common shares would be increased by the amount of gain recognized. Under the Proposed Treasury Regulations, an Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such as

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- 36 -

gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferees basis in this case will depend on the manner of the transfer. In the case of a transfer by an Electing U.S. Holder upon death, for example, the
transferees basis is generally equal to the fair market value of the Electing U.S. Holders common shares as of the date of death under Section 1014 of the Code. The specific tax effect to the U.S. Holder and the transferee may vary based
on the manner in which the common shares are transferred. Each U.S. Holder of the Registrant is urged to consult a tax advisor with respect to how the PFIC rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with respect to common shares of the Registrant, certain adverse rules may apply in the event that both the Registrant and any foreign corporation in which the Registrant directly or
indirectly holds shares is a PFIC (a lower-tier PFIC). Pursuant to certain Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or its proportionate amount of any lower-tier PFIC shares, and generally would be
subject to the PFIC rules with respect to such indirectly-held PFIC shares unless such U.S. Holder makes a timely QEF election with respect thereto. the Registrant intends to make the necessary information available to U.S. Holders to permit them to
make (and maintain) QEF elections with respect to each subsidiary of the Registrant that is a PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does not make a timely QEF election with respect to a lower-tier PFIC generally would be subject to tax (and the PFIC interest charge) on (i) any excess distribution deemed to have been
received with respect to his or its lower-tier PFIC shares and (ii) any gain deemed to arise from a so-called indirect disposition of such shares. For this purpose, an indirect disposition of lower-tier PFIC shares would generally
include (i) a disposition by the Registrant (or an intermediate entity) of lower-tier PFIC shares, and (ii) any other transaction resulting in a diminution of the U.S. Holders proportionate ownership of the lower-tier PFIC, including an
issuance of additional common shares by the Registrant (or an intermediate entity). Accordingly, each prospective U.S. Holder should be aware that he or it could be subject to tax even if such U.S. Holder receives no distributions from the
Registrant and does not dispose of its common shares.

Certain special, generally adverse, rules will apply with respect to Registrant common shares while the Registrant is a PFIC unless the U.S. Holder makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses
PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of the shares of the Registrant is owned, actually or constructively, by citizens or residents of the United States, United States
domestic partnerships or corporation, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), each of which own, actually or constructively, 10% or more of the total combined voting power of all
classes of shares entitled to vote of the Registrant (United States Shareholder), the Registrant could be treated as a controlled foreign corporation (CFC) under Subpart F of the Code. This classification would effect many
complex results, one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the
CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFCs Subpart F income and are also subject to current U.S. tax on their pro rata shares of increases in the CFCs earnings
invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Registrant
which is or was a United States Shareholder at any time during the five-year period ending on the date of the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Registrant attributable to the shares sold or
exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to United States Shareholders of the CFC. This rule generally will be effective for taxable years of United
States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. Special rules apply to United States Shareholders who are subject to the special taxation
rules under Section 1291 discussed above with respect to a PFIC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. the Registrant does not believe that it currently qualifies as
a CFC. However, there can be no assurance that the Registrant will not be considered a CFC for the current or any future taxable year.

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- 37 -

The Registrant strongly urges each prospective U.S. Holder to consult a tax advisor with respect to the adverse rules applicable, under the Proposed Treasury Regulations, to U.S. Holders of lower-tier PFIC shares.

Dividends and paying agents

Not applicable

Statement by experts

Not applicable

Documents on display

Documents concerning the Registrant which are referred to in this document may be inspected in its offices, 1407-1050 Burrard Street, Vancouver, B.C. Canada V6Z 2S3 or at the registered office at Suite 1500-1055 West Georgia Street, Vancouver B.C,
Canada. Copies of the Registrants financial statements and other continuous disclosure documents required under the British Columbia Securities Act may be viewed at www.sedar.com and documents
referred to in this document are filed with the US Securities Commission and can be viewed on the SEC website at www.sec.gov.

Subsidiary information

A list of subsidiaries of the Registrant is identified in Note 2 (b) in the notes to the consolidated financial statements and in ITEM 4. ORGANIZATIONAL STRUCTURE.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required as the Registrant is a small business issuer, in accordance with Section 12(b)-2 of the Act.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

A. There has been no material default in any indebtedness, as the Registrant has no debt.

B. The Registrant has never paid nor declared a dividend, so there are no arrearages.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act), the Registrant carried out an evaluation of the effectiveness of the design and operation of the Registrants disclosure controls and
procedures as of July 31, 2005, the latest completed fiscal year. This evaluation was carried out under the supervision and with the participation of the Registrants Chief Executive Officer, Peter Loretto, and the Registrants Chief
Financial Officer, Barry MacNeil.  Based upon that evaluation, the Registrants Chief Executive Officer and Chief Financial Officer

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- 38 -

concluded that the Registrants disclosure controls and procedures are effective in timely alerting management to material information relating to the Registrant required to be included in the Registrants periodic SEC filings. There have
been no significant changes in the Registrants internal controls or in other factors that could significantly affect internal controls subsequent to the date the Registrant carried out its evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed the Registrants reports filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed in the Registrants reports filed under the Exchange Act is accumulated and communicated to management, including the Registrants Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required
disclosure.

During the Registrants most recently completed fiscal year ended July 31, 2005, there were no changes in the Registrants internal control over financial reporting that have materially affected, or are reasonably likely to affect, its
internal control over financial reporting.

The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the Registrant's principal executive and principal financial officers, or persons performing similar functions, and
effected by the Registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Registrant;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Registrant are being
made only in accordance with authorizations of management and directors of the Registrant; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Registrant's assets that could have a material effect on the financial statements.

ITEM 16.

A. Audit committee financial expert

Our Board of Directors has determined that we have one independent audit committee financial expert serving on our audit committee. This financial expert is Mr. Douglas Lynes, who is qualified in Canada as a Chartered Accountant. Our board of
directors has determined that Mr. Lynes is independent in accordance with the American Stock Exchanges definition of audit committee member independence.

B. Code of Ethics

We have adopted a code of ethics that applies to the Chief Executive Officer and the Chief Financial Officer, as well as to all other staff. A copy of our code of ethics is available, free of charge, from the offices of Trans-Orient Petroleum Ltd.,
at 1407-1050 Burrard Street, Vancouver, British Columbia, Canada, V6Z 2S3 and this can be requested in writing, addressed to the Registrants Secretary.

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- 39 -

C. Principal Accountants Fees and Services

Principal Accountant Service(1)
    For the fiscal year ended
      July 31, 2005
    For the fiscal year ended
      July 31, 2004Audit Fees
    8,000
    8,000Audit Related
      Services
    -
    1,000Tax Fees
    -
    -All Other
      Fees
    -
    -


(1) De Visser Gray has been the Principal Accountant for the
2005 and 2004 fiscal years reported above and Sadovnick Telford & Skov were
the Principal Accountant for the 2003 fiscal year.

The nature of the services provided by De Visser Gray and
Sadovnick Telford & Skov under each of the categories indicated in the table
is described below.

Audit Fees

Audit fees were for professional services rendered by De Visser
Gray and Sadovnick Telford & Skov for the audit of our annual financial
statements and services provided in connection with statutory and regulatory
filing or engagements.

Audit-Related fees

Audit related fees are normally for assurance and related
services reasonably related to the performance of the audit or review of the
annual statements or bi-annual statements that are not reported under Audit
Fees above. There were no audit-related fees for the current or previous
year.

Tax Fees

Tax fees were for tax compliance, tax advice and tax planning
professional services. These services consisted of: tax compliance including the
review of tax returns, and tax planning and advisory services relating to common
forms of domestic and international taxation (ie: income tax, capital tax, goods
and services tax, payroll tax, and value added tax).

All Other Fees

There were no other fees incurred in the period covered in the
table above.

Pre-Approval Policies and Procedures

It is within the mandate of the Registrants Audit Committee to
approve all audit and non-audit related fees. The Audit Committee has
pre-approved specifically identified non-audit related services, including tax
compliance, review of tax returns, documentation of processes and controls as
submitted to the Audited Committee from time to time. The Auditors also present
the estimate for the annual audit related services to the committee for approval
prior to undertaking the annual audit of the financial statements.

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- 40 -

PART III

ITEM 17. FINANCIAL STATEMENTS.

Financial Statements begin on page 41.

INDEX TO FINANCIAL STATEMENTS

PageAuditors Report
      41Consolidated
      Balance Sheets
    43Consolidated Statements
        of Operations and Deficit
      44Consolidated
      Statements of Cash Flows
    45Consolidated Schedules
        of General and Administrative Expenses
      46Notes to the
      Consolidated Financial Statements
    47


The financial statements and Report of the independent Auditors
are filed as part of the Registrants Annual Report.

---

- 41 -

D E   V I S S E R   G R A
  YCHARTERED ACCOUNTANTS

401 - 905 West Pender Street Vancouver, BC Canada V6C 1L6
Tel: (604) 687-5447 Fax: (604) 687-6737

AUDITORS' REPORT

To the Shareholders of Trans-Orient Petroleum Ltd.

We have audited the consolidated balance sheets of Trans-Orient
Petroleum Ltd. as at July 31, 2005 and 2004 and the consolidated statement of
operations and deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audit in accordance with generally accepted
auditing standards (GAAS) in Canada and the standards of the Public Company
Accounting Oversight Board (PCAOB) (United States). 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.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
July 31, 2005 and 2004 and the results of its operations and its cash flows for
the years then ended in accordance with generally accepted accounting principles
in Canada.

The consolidated financial statements as at July 31, 2003 were
audited by other auditors who expressed an opinion without reservation on those
statements in their report to the shareholders dated September 26, 2003.

/s/ De Visser Gray

CHARTERED ACCOUNTANTS

Vancouver, British Columbia Canada November 17,
2005

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA  U.S.
REPORTING DIFFERENCES

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by significant uncertainties and
contingencies such as those referred to in note 1 to these consolidated
financial statements. Although we conducted our audits in accordance with both
Canadian and the standards of the PCAOB, our report to the shareholders dated
November 12, 2005 is expressed in accordance with Canadian reporting standards,
which do not require a reference to such matters when the uncertainties are
adequately disclosed in the financial statements.

/s/ De Visser Gray

CHARTERED ACCOUNTANTS

Vancouver, British Columbia Canada November 17,
2005

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- 42 -

SADOVNICK TELFORD + SKOVA Partnership of
Incorporated ProfessionalsCHARTERED ACCOUNTANTS

AUDITORS' REPORT

To the Shareholders of Trans-Orient Petroleum Ltd.

We have audited the consolidated balance sheets of Trans-Orient
Petroleum Ltd. as at July 31, 2003 and 2002 and the consolidated statements of
operations and deficit and cash flows for each of the years in the three-year
period then ended July 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian 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.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
July 31, 2003 and 2002 and the results of its operations and its cash flows for
each of the years in the three-year period then ended July 31, 2003 in
accordance with Canadian generally accepted accounting principles.

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA  U.S.
REPORTING DIFFERENCES

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by significant uncertainties and
contingencies such as those referred to in Note 1 to these consolidated
financial statements. Although we conducted our audits in accordance with both
Canadian and U.S. generally accepted auditing standards, our report to the
shareholders dated September 26, 2003 is expressed in accordance with Canadian
reporting standards, which do not require a reference to such matters when the
uncertainties are adequately disclosed in the financial statements.

/s/ Sadovnick Telford + Skov

CHARTERED ACCOUNTANTS

Vancouver, British Columbia
  Canada
  September 26, 2003, except as to Note 12(a) which is as of October 6, 2003

Sixth Floor,543 Granville Street, Vancouver, British
Columbia, Canada V6C lX8 Telephone: (604) 688-7800 Fax: (604) 688-7880
Emai/: sts@stsca.com

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- 43 -

|TRANS-ORIENT PETROLEUM
      LTD.              |   |             |   |   |             |  
|---------------------------------------------- | - | ----------- | - | - | ----------- | -
|Consolidated Balance Sheets                    |   |             |   |   |             |  
|(Expressed in United
      States Dollars)     |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|As at July 31,                                 |   | 2005        |   |   | 2004        |  
|Assets                                         |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current                                        |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Cash                                           | $ | 190,053     |   | $ | 69,887      |  
|Accounts receivable                            |   | 10,815      |   |   | 8,327       |  
|Prepaid
      expenses                         |   | 36,733      |   |   | 32,972      |  
|                                               |   |             |   |   |             |  
|                                               |   | 237,601     |   |   | 111,186     |  
|                                               |   |             |   |   |             |  
|Investments (Note 3)                           |   | 2,219,072   |   |   | 1,197,839   |  
|Property and equipment (Note 4)                |   | 85,316      |   |   | 89,676      |  
|Oil
      and gas interest                     |   | -           |   |   | 1           |  
|                                               |   |             |   |   |             |  
|Total Assets                                   | $ | 2,541,989   |   | $ | 1,398,702   |  
|                                               |   |             |   |   |             |  
|Liabilities                                    |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Current                                        |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Accounts
      payable and accrued liabilities | $ | 6,535       |   | $ | 6,017       |  
|                                               |   |             |   |   |             |  
|Total
      Liabilities                        |   | 6,535       |   |   | 6,017       |  
|                                               |   |             |   |   |             |  
|Non-Controlling
      Interest in AMG Oil Ltd. |   | 13,845      |   |   | 25,315      |  
|                                               |   |             |   |   |             |  
|Shareholders Equity                           |   |             |   |   |             |  
|                                               |   |             |   |   |             |  
|Common stock without par value;                |   |             |   |   |             |  
|Unlimited number of shares authorized;         |   |             |   |   |             |  
|Issued and outstanding at July 31, 2005:       |   |             |   |   |             |  
|2,516,869; July 31, 2004: 2,516,869 (Note 7)   |   | 13,175,075  |   |   | 13,175,075  |  
|Common stock held by subsidiary:               |   |             |   |   |             |  
|July 31, 2005: Nil; July 31, 2004: 2,205       |   | -           |   |   | (11,993     | )
|Deficit                                        |   | (10,653,466 | ) |   | (11,795,712 | )
|Total Shareholders
      Equity               |   | 2,521,609   |   |   | 1,367,370   |  
|                                               |   |             |   |   |             |  
|Total Liabilities
      & Shareholders Equity |   | 2,541,989   |   |   | 1,398,702   |  
|Continuance of operations (Note 1)             |   |             |   |   |             |  

See accompanying notes to the consolidated financial
statements

---

- 44 -

|TRANS-ORIENT
      PETROLEUM LTD.                              |   |             |   |   |             |   |   |             |  
|-------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|Consolidated Statements of Operations and Deficit              |   |             |   |   |             |   |   |             |  
|(Expressed in
      United States Dollars)                     |   |             |   |   |             |   |   |             |  
|                                                               |   |             |   |   |             |   |   |             |  
|For the years
      ended July 31,                             |   | 2005        |   |   | 2004        |   |   | 2003        |  
|                                                               |   |             |   |   |             |   |   |             |  
|Expenses                                                       |   |             |   |   |             |   |   |             |  
|                                                               |   |             |   |   |             |   |   |             |  
|General and administrative (Schedule)                          | $ | 105,757     |   | $ | 124,040     |   | $ | 144,754     |  
|                                                               |   |             |   |   |             |   |   |             |  
|Loss before other items                                        |   | (105,757    | ) |   | (124,040    | ) |   | (144,754    | )
|                                                               |   |             |   |   |             |   |   |             |  
|Other Items:                                                   |   |             |   |   |             |   |   |             |  
|                                                               |   |             |   |   |             |   |   |             |  
|Gain on forgiveness of debt                                    |   | -           |   |   | -           |   |   | 37,556      |  
|Gain on sale of investment (Note 3)                            |   | 1,218,319   |   |   | 528,931     |   |   | 10,054      |  
|Interest income                                                |   | 1,896       |   |   | 1,696       |   |   | 2,882       |  
|Loss on sale of investment (Note 3)                            |   | (4,000      | ) |   | -           |   |   | -           |  
|Loss on sale of common stock held by
      subsidiary (Note 3) |   | (8,685      | ) |   | -           |   |   | -           |  
|Recovery of loan receivable previously written-off (Note 6)    |   | 29,004      |   |   | 24,660      |   |   | 40,426      |  
|Recovery of costs                                              |   | -           |   |   | 46,477      |   |   | -           |  
|Write-down of investment                                       |   | -           |   |   | -           |   |   | (258,529    | )
|Write-off of loan receivable                                   |   | -           |   |   | (30,000     | ) |   | -           |  
|Write-off of oil and gas interest                              |   | (1          | ) |   | -           |   |   | (286,331    | )
|Write-off of property and equipment                            |   | -           |   |   | (21,161     | ) |   | -           |  
|                                                               |   |             |   |   |             |   |   |             |  
|Income (loss) from operations                                  |   | 1,130,776   |   |   | 426,563     |   |   | (598,696    | )
|Non-controlling
      interests portion of AMGs loss         |   | 11,470      |   |   | 32,266      |   |   | 142,435     |  
|                                                               |   |             |   |   |             |   |   |             |  
|Income (loss) before unusual item                              |   | 1,142,246   |   |   | 458,829     |   |   | (456,261    | )
|Gain on recognition of negative goodwill                       |   | -           |   |   | -           |   |   | 195,254     |  
|                                                               |   |             |   |   |             |   |   |             |  
|Net income (loss) for the year                                 |   | 1,142,246   |   |   | 458,829     |   |   | (261,007    | )
|                                                               |   |             |   |   |             |   |   |             |  
|Deficit  Beginning of year                                    |   | (11,795,712 | ) |   | (12,254,541 | ) |   | (11,993,534 | )
|                                                               |   |             |   |   |             |   |   |             |  
|Deficit  End of year                                          | $ | (10,653,466 | ) | $ | (11,795,712 | ) | $ | (12,254,541 | )
|                                                               |   |             |   |   |             |   |   |             |  
|Income (loss) per share - basic                                | $ | 0.45        |   | $ | 0.19        |   | $ | (0.11       | )
|- diluted                                                      | $ | 0.45        |   | $ | 0.14        |   | $ | (0.11       | )
|                                                               |   |             |   |   |             |   |   |             |  
|                                                               |   |             |   |   |             |   |   |             |  
|Weighted-average number of common shares
      outstanding,    |   |             |   |   |             |   |   |             |  
|net of
      reciprocal holdings                               |   | 2,516,869   |   |   | 2,431,344   |   |   | 2,415,917   |  

See accompanying notes to the consolidated financial
statements

---

- 45 -

|TRANS-ORIENT
      PETROLEUM LTD.                               |   |            |   |   |            |   |   |          |  
|--------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | -------- | -
|Consolidated Statements of Cash Flows                           |   |            |   |   |            |   |   |          |  
|(Expressed in
      United States Dollars)                      |   |            |   |   |            |   |   |          |  
|                                                                |   |            |   |   |            |   |   |          |  
|For the years
      ended July 31,                              |   | 2005       |   |   | 2004       |   |   | 2003     |  
|                                                                |   |            |   |   |            |   |   |          |  
|Net increase (decrease) of cash related to the
      following: |   |            |   |   |            |   |   |          |  
|                                                                |   |            |   |   |            |   |   |          |  
|Operating Activities                                            |   |            |   |   |            |   |   |          |  
|Net income (loss) for the year                                  | $ | 1,142,246  |   | $ | 458,829    |   | $ | (261,007 | )
|Items not affecting cash:                                       |   |            |   |   |            |   |   |          |  
|Amortization                                                    |   | 4,360      |   |   | 9,924      |   |   | 12,430   |  
|Gain on recognition of negative goodwill                        |   | -          |   |   | -          |   |   | (195,254 | )
|Gain on forgiveness of debt                                     |   | -          |   |   | -          |   |   | (37,556  | )
|Gain on sale of investment                                      |   | (1,218,319 | ) |   | (528,931   | ) |   | (10,054  | )
|Loss on sale of investment                                      |   | 4,000      |   |   | -          |   |   | -        |  
|Loss on sale of common stock held by subsidiary                 |   | 8,685      |   |   | -          |   |   | -        |  
|Non-controlling interest                                        |   | (11,470    | ) |   | (32,266    | ) |   | (142,435 | )
|Recovery of loan receivable previously written-off              |   | (29,004    | ) |   | (24,660    | ) |   | (40,426  | )
|Recovery of costs                                               |   | -          |   |   | (46,477    | ) |   | -        |  
|Write-down of investment                                        |   | -          |   |   | -          |   |   | 258,529  |  
|Write-off of loan receivable                                    |   | -          |   |   | 30,000     |   |   | -        |  
|Write-off of oil and gas interest                               |   | 1          |   |   | -          |   |   | 286,331  |  
|Write-off of property and
      equipment                       |   | -          |   |   | 21,161     |   |   | -        |  
|Changes in non-cash working capital items:                      |   |            |   |   |            |   |   |          |  
|Accounts payable and accrued
      liabilities                  |   | 518        |   |   | 6,802      |   |   | (8,375   | )
|Accounts receivable                                             |   | (2,488     | ) |   | 3,802      |   |   | 3,243    |  
|Loan receivable                                                 |   | 29,004     |   |   | 24,660     |   |   | 10,426   |  
|Prepaid
      expenses                                          |   | (3,761     | ) |   | 1,053      |   |   | (5,218   | )
|Net cash used for operating activities                          |   | (76,228    | ) |   | (76,103    | ) |   | (129,366 | )
|                                                                |   |            |   |   |            |   |   |          |  
|Financing Activities                                            |   |            |   |   |            |   |   |          |  
|Common stock
      issued for cash                              |   | -          |   |   | 30,000     |   |   | -        |  
|Net cash provided by financing activities                       |   | -          |   |   | 30,000     |   |   | -        |  
|                                                                |   |            |   |   |            |   |   |          |  
|Investing Activities                                            |   |            |   |   |            |   |   |          |  
|Acquisition of control of subsidiary, net of cash acquired      |   | -          |   |   | -          |   |   | 107,413  |  
|Proceeds from sale of investment                                |   | 2,222,479  |   |   | 1,084,951  |   |   | 98,706   |  
|Proceeds from sale of common stock held by subsidiary           |   | 3,308      |   |   | -          |   |   | -        |  
|Purchases of investments                                        |   | (2,029,393 | ) |   | (1,196,250 | ) |   | (140,000 | )
|Purchases of
      property and equipment, net                  |   | -          |   |   | -          |   |   | (2,588   | )
|Net cash provided by (used for) investing activities            |   | 196,394    |   |   | (111,299   | ) |   | 63,531   |  
|                                                                |   |            |   |   |            |   |   |          |  
|Net increase (decrease) in cash                                 |   | 120,166    |   |   | (157,402   | ) |   | (65,835  | )
|Cash -
      Beginning of year                                  |   | 69,887     |   |   | 227,289    |   |   | 293,124  |  
|Cash - End of year                                              | $ | 190,053    |   | $ | 69,887     |   | $ | 227,289  |  

See accompanying notes to the consolidated financial
statements

---

- 46 -

|TRANS-ORIENT
      PETROLEUM LTD.                                   |   |         |   |   |         |   |   |         |  
|------------------------------------------------------------------- | - | ------- | - | - | ------- | - | - | ------- | -
|Consolidated Schedules of General and
      Administrative Expenses |   |         |   |   |         |   |  
|(Expressed in
      United States Dollars)                          |   |         |   |   |         |   |   |         |  
|                                                                    |   |         |   |   |         |   |   |         |  
|For the years
      ended July 31,                                  |   | 2005    |   |   | 2004    |   |   | 2003    |  
|                                                                    |   |         |   |   |         |   |   |         |  
|General and Administrative Expenses                                 |   |         |   |   |         |   |   |         |  
|                                                                    |   |         |   |   |         |   |   |         |  
|Accounting and audit                                                | $ | 13,935  |   | $ | 28,003  |   | $ | 5,961   |  
|Amortization                                                        |   | 4,360   |   |   | 9,924   |   |   | 12,430  |  
|Consulting fees                                                     |   | -       |   |   | -       |   |   | -       |  
|Corporate relations and development                                 |   | -       |   |   | 4,579   |   |   | 7,161   |  
|Directors fees                                                      |   | 20,509  |   |   | -       |   |   | -       |  
|Filing and transfer agency fees                                     |   | 20,630  |   |   | 14,252  |   |   | 10,164  |  
|Foreign exchange gain                                               |   | (67,560 | ) |   | (2,206  | ) |   | (1,066  | )
|Investor relations                                                  |   | -       |   |   | -       |   |   | 24,188  |  
|Legal                                                               |   | 12,387  |   |   | 5,076   |   |   | 5,214   |  
|Office and miscellaneous                                            |   | 19,076  |   |   | 13,655  |   |   | 15,817  |  
|Printing                                                            |   | 5,913   |   |   | 3,201   |   |   | 3,653   |  
|Rent                                                                |   | 17,069  |   |   | 13,704  |   |   | 16,575  |  
|Telephone                                                           |   | 5,256   |   |   | 4,433   |   |   | 7,353   |  
|Travel, promotion and accommodation                                 |   | 22,115  |   |   | 5,498   |   |   | 12,082  |  
|Wages and benefits                                                  |   | 32,067  |   |   | 23,921  |   |   | 25,222  |  
|                                                                    |   |         |   |   |         |   |   |         |  
|                                                                    | $ | 105,757 |   | $ | 124,040 |   | $ | 144,754 |  

See accompanying notes to the consolidated financial
statements

---

- 47 -

|                                                                                                                           
|---------------------------------------------------------------------------------------------------------------------------
|TRANS-ORIENT
      PETROLEUM LTD.Notes to the Consolidated Financial Statements 
      (Expressed in United States Dollars)
|                                                                                                                           
|For the Years Ended
      July 31, 2005 and 2004                                                                           

NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS

Trans-Orient Petroleum Ltd. (the Company) was incorporated
under the Company Act (British Columbia) on July 25, 1986 and continued its
jurisdiction of incorporation to the Yukon Territory under the Business
Corporations Act (Yukon). The Company is engaged in identifying, financing, and
providing business development services for early-stage resource and technology
businesses. The Companys operating strategy is to acquire an equity interest in
certain companies and to provide financial, managerial, and technical support to
accelerate the achievement of these companies' business goals and objectives. At
July 31, 2005, the Company held interests in four such companies.

The Companys consolidated financial statements are presented
on a going concern basis, which assumes that the Company will continue to
realize its assets and discharge its liabilities in the normal course of
operations. However, the Company does not generate sufficient cash flow from
operations to adequately fund its activities and has therefore relied
principally upon the issuance of securities for financing. Future capital
requirements will depend on many factors including the Company's ability to
execute its business plan. The Company intends to continue relying upon the
issuance of securities to finance its future activities but there can be no
assurance that such financing will be available on a timely basis under terms
acceptable to the Company. Although these consolidated financial statements do
not include any adjustments that may result from the inability to secure future
financing, such a situation would have a material adverse effect on the
Companys business, results of operations and financial condition.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

|a) | Accounting principles and use of
  estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These financial statements are prepared in conformity
      with Canadian generally accepted accounting principles, which require the
      Companys management to make informed judgements and estimates that affect
      the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities at the date of the financial statements
      and the reported amounts of revenues and expenses during the fiscal year.
      Significant estimates include, but are not limited to, the accounting for
      amortization and the determination of the net recoverable value of assets
      and income taxes. The Companys investments in associated companies are
      also items that, due to expected market volume and price fluctuation may
      yield net realizable values that are materially different from their
      current carrying values at any point in time. Actual results could differ
      from these estimates.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Material differences between Canadian and United States
      generally accepted accounting principles, applicable to the Companys
      financial statements, are described in note 10.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|b) | Basis of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These consolidated financial statements include the
      accounts of the Company, its wholly-owned subsidiary, DLJ Management
      Corp., and AMG Oil Limited, in which the Company holds a 49.4% controlling
      interest consisting of 8,200,000 shares. All significant inter-company
      balances and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|c) | Principles of accounting for investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Companys investments are accounted for using
        either the equity method or cost methods of accounting. The equity method
        is used when the Company, through its level of investment, exercises significant
        influence over the investee. The cost method of accounting is applied
        to investments in Companies over which the Company does not exercise significant
        influence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

- 48 -

|   | The Companys investments are recorded at cost
        and are adjusted to fair value, where determinable, only if there is an,
        other-than-temporary decline in value as the Company intends to hold them
        for a period of greater than one year.                                                                                                                                                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|d) | Translation of foreign currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Transactions of the Company and its subsidiaries originating
        in foreign currencies are translated into U.S. dollars at the rates prevailing
        on the dates of the transactions. Monetary assets and liabilities are
        translated at the year-end rates of exchange and non-monetary items are
        translated at historical exchange rates applicable to the underlying transactions.
        The resulting net gain or loss is included in the consolidated statements
        of operations and deficit.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|e) | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company's financial instruments consist of current
        assets and current liabilities. The fair values of the current assets
        and liabilities approximate the carrying amounts due to the short-term
        nature of these instruments.                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|f) | Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Property and equipment are stated at cost less accumulated
        amortization. Amortization is computed over the estimated useful lives
        of the assets as follows:                                                                                                                                                                                                                                                                                                                                                      

| | Apartment:                      | 4% per annum on a declining balance basis   
| | ------------------------------- | --------------------------------------------
| | Furniture and office equipment: | 20% per annum on the declining balance basis
| | Leasehold improvements:         | straight-line basis over five years         

|   | For each fiscal year in which property and equipment are
      acquired, management deems each acquisition to occur midway through the
      fiscal year and, accordingly, the amortization recorded in respect to such
      assets is restricted to one-half of the amount calculated based on year
      end balances. Amortization is not recorded in the year of
  disposal.                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|g) | Basic and diluted net income (loss) per common
      share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Basic net income (loss) per common share is calculated by
      dividing the net income (loss) by the weighted average number of common
      shares outstanding, during the year. Diluted net loss per common share is
      not calculated as its effect on net loss per share is
  anti-dilutive.                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|h) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company follows the Recommendations of the Canadian
      Institute of Chartered Accountants in connection with accounting for stock
      option-based compensation. These standards were first applied on a
      prospective basis to all awards granted on or after January 1, 2002, and
      established standards for the recognition, measurement and disclosure of
      stock option-based compensation and other stock based payments made in
      exchange for goods and services.                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As amended during the current year, and as applied by the
      Company to both the current year and comparative years, the standard now
      requires that all stock option based awards made to consultants and
      employees be recognized in these consolidated financial statements and
      measured using a fair value-based method.                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|i) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company accounts for and measures future tax assets
      and liabilities for future tax consequences attributable to differences
      between the financial statement carrying amounts of existing assets and
      liabilities and their respective tax bases. Future tax assets and
      liabilities are measured using the enacted or substantively-enacted tax
      rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled. The effect
      on future tax assets and liabilities of a change in tax rates is
      recognized in income in the

---

- 49 -

|   | period that includes the date of the enactment or
      substantive enactment of the change. When the future realization of income
      tax assets does not meet the test of being more likely than not to occur,
      a valuation allowance in the amount of potential future benefit is taken
      and no asset is recognized. Such an allowance would apply fully to all
      potential future tax assets of the Company.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Companys accounting policy for future income taxes
      currently has no effect on the financial statements of any of the fiscal
      years presented.                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|j) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Common shares issued for non-monetary consideration are
      recorded at their fair market value based upon the lower of the trading
      price of the Companys shares on the OTC Bulletin Board on the date of the
      agreement to issue shares and the date of share
issuance.                                                                                                                                          

NOTE 3 - INVESTMENTS

At July 31, 2005, the Companys ownership interests in
investments are accounted for under the consolidation method or cost method of
accounting are as follows:

|                            |   |           |  |   |           |  |   |           |  |  | Percentage of | 
|--------------------------- | - | --------- |  | - | --------- |  | - | --------- |  |  | ------------- | 
|                            |   | July 31,  |  |   | July 31,  |  |   | July 31,  |  |  | Ownership/    | 
|                            |   | 2004      |  |   | 2005      |  |   | 2005      |  |  | Number of     | 
|                            |   | Carrying  |  |   | Carrying  |  |   | Fair      |  |  | Common        | 
|                            |   | Value     |  |   | Value     |  |   | Value     |  |  | Shares Held   | 
|Consolidation Method:       |   |           |  |   |           |  |   |           |  |  | ,             | 
|AMG Oil Ltd.                | $ | -         |  | $ | -         |  | $ | -         |  |  | 49.40%/       | 
|                            |   |           |  |   |           |  |   |           |  |  | 8,200,000     | 
|Cost Method:                |   |           |  |   |           |  |   |           |  |  |               | 
|Verida Internet Corp.       |   | 1         |  |   | 1         |  |   | 1         |  |  | 8.68%/        | 
|                            |   |           |  |   |           |  |   |           |  |  | 844,642       | 
|Austral Pacific Energy Ltd. |   | 1,147,838 |  |   | 1,979,071 |  |   | 3,753,187 |  |  | 7.42%/        | 
|                            |   |           |  |   |           |  |   |           |  |  | 1,384,940     | 
|Gondwana Energy, Ltd.       |   | 50,000    |  |   | 40,000    |  |   | 40,000    |  |  | 12.43%/       | 
|                            |   |           |  |   |           |  |   |           |  |  | 399,999       | 
|TAG Oil Ltd.                |   | -         |  |   | 200,000   |  |   | 470,000   |  |  | 1.91%/        | 
|                            |   |           |  |   |           |  |   |           |  |  | 500,000       | 
|                            |   |           |  |   |           |  |   |           |  |  |               | 
|                            |   | 1,197,839 |  |   | 2,219,072 |  |   | 4,263,188 |  |  |               | 
|                            |   |           |  |   |           |  |   |           |  |  |               | 
|                            | $ | 1,197,839 |  | $ | 2,219,072 |  | $ | 4,263,188 |  |  |               | 

During the 2005 fiscal year, the Company, sold 788,800 shares
of its investment in Austral Pacific Energy Ltd. (Austral Pacific), with a
book value of $998,160 or $1.27 per share, for $2,216,479, or approximately
$2.81 per share, resulting in a gain over carrying value of $1,218,319. The
proceeds from the sale of this investment and additional working capital were
used to exercise 836,845 Austral Pacific Energy Ltd. (Austral Pacific) share
purchase warrants at an exercise price of US$1.50 per share. On December 21,
2004, the Company exercised 382,750 Austral Pacific share purchase warrants at
an exercise price of NZ$2.10 per share.

During the 2005 fiscal year the Companys controlled subsidiary
AMG Oil, sold a total of 100,000 shares of Gondwana Energy, Ltd. with a book
value of $10,000, for proceeds of $6,000 resulting in a loss on sale over
carrying value of $4,000.

---

- 50 -

On March 18, 2005, the Company participated in a private
placement in TAG Oil Ltd. The Company purchased 500,000 units, at $0.40 per
unit. Each unit consists of one share and one share purchase warrant with each
warrant entitling the Company to purchase one common share at a price of US$0.60
in the first year and US$0.80 in the second year, subject to an accelerated
expiry if a trigger price is reached of US$1.00 in year one and US$1.20 in year
two, in which event the warrant will expire thirty days after notice is given to
the holder that the trigger price was reached, if not exercised.

During the 2004 fiscal year, the Company sold 725,000 shares of
its investment in Austral Pacific Energy Ltd. (Austral Pacific) (formerly
Indo-Pacific Energy Ltd.), with a book value of $442,250 or $0.61 per share,
for $903,353, or approximately $1.25 per share, resulting in a gain over
carrying value of $461,103. The proceeds from the sale of this investment and
additional working capital were used to purchase 765,500 units of Austral
Pacific at a price of $1.30 (NZ$2.00) per unit by participating in Austral
Pacifics initial public offering (IPO) to list on the New Zealand Stock
Exchange. Each unit of Austral Pacific purchased under the IPO includes one
common share and a half warrant, exercisable for one year at a price of
approximately $1.37 (NZ$2.20) . The Company also acquired an additional 175,000
shares of Austral Pacific through the exercise of share purchase warrants at a
price of $201,250 or $1.15 per share.

During the 2004 fiscal year, the Company also sold an
additional 93,500 shares of Austral Pacific, with a carrying value of $113,770
or $1.22 per share, for $181,598 or $1.94 per share, resulting in a gain over
carrying value of $67,828. The Company reached an agreement with Austral Pacific
to amend the expiry date of the Companys 836,845 Series A warrants from
December 31, 2003 to January 5, 2005 in consideration of Austral Pacific
canceling the Companys Series B warrants held as well as an increase in the
exercise price of the Series A warrants by US$0.10 to US$1.50 per common
share.

At July 31, 2005, the Company held the following share purchase
warrants to acquire, shares of common stock:

|             | Number    | Price           | Expiry         
|------------ | --------- | --------------- | ---------------
|             | of Shares | Per
      Share | Date           
|TAG Oil Ltd. | 500,000   | $0.60/          | March 18, 2006/
|             |           | $0.80           | March 18, 2007 

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment are comprised as follows:

|                                    |   | 2005     |   |   | 2004     |  
|----------------------------------- | - | -------- | - | - | -------- | -
|                                    |   |          |   |   |          |  
|Apartment                           | $ | 100,945  |   | $ | 100,945  |  
|Furniture and office equipment      |   | 87,164   |   |   | 108,325  |  
|Leasehold improvements              |   | 2,337    |   |   | 2,337    |  
|                                    |   | 190,446  |   |   | 211,607  |  
|Accumulated amortization            |   | (105,130 | ) |   | (100,770 | )
|Write-off of property and equipment |   | -        |   |   | (21,161  | )
|                                    | $ | 85,316   |   | $ | 89,676   |  

NOTE 5 - RELATED PARTY TRANSACTIONS

The Company is of the view that the amounts incurred for
services provided by related parties approximates what the Company would incur
to non-arms length parties for the same services. The following are related
party transactions not disclosed elsewhere in these financial statements.

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- 51 -

|a) | Share Capital                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | During the 2004 fiscal year, the Company issued 100,000
      shares of its capital stock, resultant from the exercise of share purchase
      warrants. This issuance included the Companys President and other
      individuals related to the Company. The Company also extended the expiry
      date of the remaining share purchase warrants to June 13, 2005.
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | Refer to Note 7                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                       
|b) | Consulting Agreement                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | On April 1, 2005, the Company entered into a Consulting
      Agreement with a private company wholly-owned by its President to provide
      executive services to the Company. The agreement is for a one-year period,
      extendable if agreed to by both parties with monthly compensation of
      $5,000.                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                       
|c) | Other                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | During the 2005 fiscal year, the Company incurred $3,589
      (July 31, 2004  $9,056; July 31, 2003  $15,317) for wages and benefits
      to a former director of the Company.                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                       
|   | During the 2005 fiscal year, the Company incurred $2,135
      (July 31, 2004  Nil) for hourly consulting fees to a current director of
      the Company.                                                                                                                                                                                                           

NOTE 6  LOAN RECEIVABLE

Subsequent to the write-off, in the
2001 fiscal year, of a loan of $517,115 made to Verida Internet Corp, (Verida)
the Company negotiated a loan repayment schedule with Verida allowing the
Company to receive monthly payments of approximately CAD$15,170 (equivalent to
US$10,799 as at July 31, 2003) for a period of twenty-four months. The total
that was to be received, per the original agreement, was CAD$363,982 (equivalent
to US$259,099 as at July 31, 2003), including principal and interest.

The Company did not receive any
payments for the period between November 2002 and March 2003, and after
receiving notice during the first quarter of the 2003 fiscal year from the payee
that they were not in a financial position to continue paying the Company, the
Company negotiated a revised loan repayment term sheet with an effective date of
April 1, 2003 whereby the Company will receive a reduced monthly repayment
amount over a period of five years. The Company will receive CAD$3,000
(equivalent to US$2,451 as at July 31, 2005) per month, which includes annual
interest of 12%, over this new repayment period.

There is considerable doubt whether the
Company will receive all future payments relating to the loan repayment
schedule. For the fiscal year ended July 31, 2005 the Company has received
$29,004 (July 31, 2004 - $ 24,660; July 31, 2003  $40,426).

NOTE 7 - SHARE CAPITAL

a) Authorized and Issued Share Capital

The authorized share capital of the Company consists of an
unlimited number of common shares without par value.

| |                                                     |  | Number    |  |   |            | 
| | --------------------------------------------------- |  | --------- |  | - | ---------- | 
| | Issued and fully paid:                              |  | of Shares |  |   | Amount     | 
| |                                                     |  |           |  |   |            | 
| | Balance at July 31, 2003                            |  | 2,416,869 |  | $ | 13,145,075 | 
| | Shares issued during the 2004 fiscal year for cash: |  |           |  |   |            | 
| | Issued
      for warrants exercised                 |  | 100,000   |  |   | 30,000     | 
| |                                                     |  |           |  |   |            | 
| | Balance at July 31, 2004 and 2005                   |  | 2,516,869 |  | $ | 13,175,075 | 

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- 52 -

b) Incentive Stock Options and Share Purchase
Warrants

> During the 2005 fiscal year, no stock options were granted
>     or amended.
>   On March 31, 2005, 27,777 stock options exercisable at $31.50
>     per share expired unexercised.
>   On June 13, 2005, 900,000 share purchase warrants exercisable
>     at $0.35 per share expired unexercised.

NOTE 8 - INCOME TAXES

At July 31, 2005, the Company has approximately CAD$3.88
million (July 31, 2004 - CAD$3.88 million; July 31, 2003 - CAD$3.58 million) of
capital losses in resource and other unused tax pools to offset future taxable
income derived in Canada. Additionally, at July 31, 2005, the Company has
non-capital losses of approximately CAD$2.35 million (July 31, 2004 - CAD$2.90
million; July 31, 2003 - CAD$2.80 million) available for future deductions from
taxable income derived in Canada, which expire as follows:

| | 2006 | $ | 461,164   |  | 
| | ---- | - | --------- |  | 
| | 2007 |   | 448,571   |  | 
| | 2008 |   | 954,501   |  | 
| | 2009 |   | 55,146    |  | 
| | 2010 |   | 334,163   |  | 
| | 2011 |   | 97,831    |  | 
| |      |   |           |  | 
| |      | $ | 2,351,376 |  | 

The potential future benefit associated with these excess
resource tax pools and non-capital loss carry-forwards has not been recognized
in these financial statements, as it cannot be considered likely that these
amounts will be utilized to reduce future taxable income.

NOTE 9  SUBSEQUENT EVENTS

Investments

On October 13, 2005, the Company participated in a private
placement in Austral Pacific Energy Ltd. The Company purchased 200,000 units at
US$2.50 per unit. Each unit consists of one share and one half of one share
purchase warrant, with each warrant entitling the Company to purchase one common
share at a price of US$3.50 per share subject to an accelerated expiry if a
trigger price of US$4.50 is reached in the first twelve months from the issue
date. The warrants expire on October 13, 2006.

On September 1, 2005, the Company exercised 500,000 TAG Oil
Ltd. share purchase warrants at a price of US$0.60 per share. The Company then
sold 1,000,000 shares of TAG Oil with a book value of $500,000 for proceeds of
approximately $1,140,831 for a gain over book value of approximately $640,831.

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- 53 -

NOTE 10 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles (Canadian
GAAP) which conform in all material respects with United States generally
accepted accounting principles (U.S. GAAP) except for the following
differences:

|a) | Assets                                                                                                                                                                                                                                                                                                                                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                  
|   | Under Canadian GAAP, the Companys investments accounted
      for under the cost method of accounting are valued at the lower of cost or
      market value. Under U.S. GAAP, such investments are classified as
      available-for-sale securities and reported at market value, with
      unrealized gains and losses included as a component of comprehensive
      income.

| |                                           |   | July 31,  |  |   | July 31,  | 
| | ----------------------------------------- | - | --------- |  | - | --------- | 
| |                                           |   | 2005      |  |   | 2004      | 
| |                                           |   |           |  |   |           | 
| | Investments under Canadian GAAP           | $ | 2,219,072 |  | $ | 1,197,839 | 
| | Adjustment required under U.S. GAAP       |   | 1,140,541 |  |   | 199,715   | 
| | Cumulative historical adjustments to date |   | 903,574   |  |   | 703,859   | 
| |                                           |   |           |  |   |           | 
| | Investments under U.S. GAAP               | $ | 4,263,187 |  | $ | 2,101,413 | 

Total assets under U.S. GAAP as at July 31, 2005 and
  2004 are $4,586,104 and $2,302,276, respectively.

|b) | Stockholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | i) Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Under U.S. GAAP, compensation cost must be considered for
      all stock options granted requiring the Company to utilize both the
      intrinsic value-based and the fair value based methods of accounting and
      reporting stock-based compensation. Under Canadian GAAP, no such cost is
      recognized. The Company, if required to report under U.S. GAAP, would
      elect to apply Accounting Principles Board Opinion No. 25: Accounting for
      Stock Issued to Employees ("APB 25") to account for all stock options
      granted. Under APB 25, compensation cost must be recognized for all
      compensatory stock options granted whenever the market price of the
      Companys shares on the date of grant exceeds the exercise
price.                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Further, Statement of Financial Accounting Standards No.
      123: Accounting for Stock-Based Compensation ("SFAS 123") requires
      additional disclosure to reflect the results of the Company as if it had
      elected to follow SFAS 123. SFAS 123 requires a fair value based method of
      accounting for stock options using the Black-Scholes option pricing model.
      This model is developed for use in estimating the fair value of traded
      options and requires the input of and is highly sensitive to subjective
      assumptions including the expected stock price volatility. Stock options
      granted by the Company have characteristics significantly different from
      those of traded options. In the opinion of management, the existing model
      does not provide a reliable single measure of the fair value of stock
      options granted by the Company.

| |                                                      |   | July 31,   |  |   | July 31,   | 
| | ---------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                      |   | 2005       |  |   | 2004       | 
| | Common stock under Canadian GAAP                     | $ | 13,175,075 |  | $ | 13,175,075 | 
| | Cumulative historical pro-forma adjustments to date  |   | 833,611    |  |   | 833,611    | 
| | Common stock under U.S. GAAP applying
      SFAS 123 | $ | 14,008,686 |  | $ | 14,008,686 | 

---

- 54 -

In accordance with SFAS 123, the
following is a summary of the changes in the Companys stock options for the
2005, 2004 and 2003 fiscal years:

| |                              |  | 2005      |   |  | 2004     |  |  | 2003      | 
| | ---------------------------- |  | --------- | - |  | -------- |  |  | --------- | 
| |                              |  |           |   |  | Weighted |  |  |           | 
| |                              |  |           |   |  | Average  |  |  |           | 
| |                              |  | Number    |   |  | Exercise |  |  | Number    | 
| |                              |  | of Shares |   |  | Price    |  |  | of Shares | 
| |                              |  |           |   |  |          |  |  |           | 
| | Balance at beginning of year |  | 27,777    |   |  | $ 31.50  |  |  | 27,777    | 
| | Granted                      |  | -         |   |  | -        |  |  | -         | 
| | Exercised                    |  | -         |   |  | -        |  |  | -         | 
| | Expired                      |  | (27,777   | ) |  | 31.50    |  |  | -         | 
| | Cancelled                    |  | -         |   |  | -        |  |  | -         | 
| | Outstanding and exercisable  |  |           |   |  |          |  |  |           | 
| | at end of year               |  | -         |   |  | $  -     |  |  | 27,777    | 

No stock options were granted during
the 2005, 2004 or 2003 fiscal years.

There has been no difference to the Companys net loss or loss
per share as reported under Canadian GAAP when the fair value based method of
accounting defined in SFAS 123 had been applied, on a pro-forma basis, to the
2005, 2004 or 2003 fiscal years.

ii) Accumulated Deficit

The effects of Note 10(b)(i) on
accumulated deficit are as follows:

| |                                           |   | July 31,    |   |   | July 31,    |  
| | ----------------------------------------- | - | ----------- | - | - | ----------- | -
| |                                           |   | 2005        |   |   | 2004        |  
| |                                           |   |             |   |   |             |  
| | Deficit under Canadian GAAP               | $ | (10,653,465 | ) | $ | (11,795,712 | )
| | Net income under U.S. GAAP                |   | 1,142,246   |   |   | 458,829     |  
| | Deduct net income under Canadian GAAP     |   | (1,142,246  | ) |   | (458,829    | )
| | Cumulative historical adjustments to date |   | (833,611    | ) |   | (833,611    | )
| |                                           |   |             |   |   |             |  
| | Accumulated deficit under U.S. GAAP       | $ | (11,487,076 | ) | $ | (12,629,323 | )

iii) Accumulated Other Comprehensive Income

The effects of Note 10(a) on
accumulated other comprehensive income are as follows:

| |                                           |   | July 31,  |  |   | July 31, | 
| | ----------------------------------------- | - | --------- |  | - | -------- | 
| |                                           |   | 2005      |  |   | 2004     | 
| | Accumulated other comprehensive income    |   |           |  |   |          | 
| | under Canadian GAAP                       | $ | -         |  | $ | -        | 
| | Unrealized gain on investments            |   | 1,140,541 |  |   | 703,859  | 
| | Cumulative historical adjustments to date |   | 903,574   |  |   | 199,715  | 
| |                                           |   |           |  |   |          | 
| | Accumulated other comprehensive income    |   |           |  |   |          | 
| | under U.S. GAAP                           | $ | 2,044,115 |  | $ | 903,574  | 

---

- 55 -

|   | As a result of these adjustments under U.S. GAAP, total
      stockholders equity as at July 31, 2005 and 2004 are $4,565,725 and
      $2,282,937, respectively.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                   
|c) | Net Income (Loss) and Comprehensive Income for the
      Year                                                                                                     
|   |                                                                                                                                                                   
|   | The following are the effects of Notes 10(a) and (b) on
      net loss and comprehensive income (loss) for the 2005, 2004 and 2003
      fiscal years:            

| |                                          |   | 2005      |  |   | 2004      |  |   | 2003     |  
| | ---------------------------------------- | - | --------- |  | - | --------- |  | - | -------- | -
| |                                          |   |           |  |   |           |  |   |          |  
| | Net income (loss) for the year under     | $ | 1,142,246 |  | $ | 458,829   |  | $ | (261,007 | )
| | Canadian and US GAAP                     |   |           |  |   |           |  |   |          |  
| | Other comprehensive income (loss):       |   |           |  |   |           |  |   |          |  
| | Unrealized gain on investment            |   | 1,140,541 |  |   | 703,859   |  |   | 199,715  |  
| |                                          |   |           |  |   |           |  |   |          |  
| | Comprehensive income (loss) for the year |   |           |  |   |           |  |   |          |  
| | under U.S. GAAP                          | $ | 2,282,787 |  | $ | 1,162,688 |  | $ | (61,292  | )

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- 56 -

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. EXHIBITS

Exhibit 
        Reference
      Exhibition Description1.1
      Certificate
        of Continuance (1)1.2
      Notice
        of Articles (1)1.3
      Articles
        (1)4.1
      Agreement dated August 23, 2002 between the Registrant
        and Indo-Pacific Energy Ltd. for the purchase of 175,000 units Of Indo-Pacific
        at a price of US$.80 per unit. (2)4.2
      Consulting
        Agreement between the Registrant and PCL Holdings Ltd. dated April 1,
        2005. (1)8.0
      List
        of Wholly-Owned Subsidiaries of Trans-Orient Petroleum Ltd. (1)11
      Code of Ethics (4)12
      Audit
        Committee Charter (1)14.1
      Auditors report
        for the fiscal years 2003 and 2002 (3)14.2
      Change of auditor
        papers (4)31.1
      Section
        302(a) Certification of CEO (1)31.2
      Section
        302(a) Certification of CFO (1)32.1
      Section
        906 Certifications of CEO and CFO (1)


| | (1) | Filed herewith.                                                                            
| | --- | -------------------------------------------------------------------------------------------
| |     |                                                                                            
| | (2) | Incorporated by reference as previously included in Form
      20-F filed January 31, 2003.
| |     |                                                                                            
| | (3) | Incorporated by reference as previously included in Form
      20-F filed January 30, 2004.
| |     |                                                                                            
| | (4) | Incorporated by reference as previously included in Form
      20-F filed January 31, 2005.

---

- 57 -

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant certifies that it meets all of the
requirements for filing on Form 20-F at July 31, 2005 and has duly caused this
annual report to be signed on its behalf by the undersigned, thereunto duly
authorized.

January 26, 2006

TRANS-ORIENT PETROLEUM LTD.

|By: | */s/ Barry MacNeil*                        | 
|--- | ------------------------------------------ | 
|    | Barry MacNeil, Secretary, CFO and Director | 

---