UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, DC 20549

FORM 10-KSB

Annual Report Under
Section 13 or 15 (d) of the Securities Exchange
Act of 1934

For the fiscal year
ended September 30, 2003

Commission file number:
0-12809

GOLDEN CHIEF RESOURCES, INC.
(Name of small business
issuer in its charter)

|State of Kansas                                                | 48-0846635                        
|-------------------------------------------------------------- | ----------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer
Identification #)

1711 E. Frankford,
Suite 104, Carrollton, Texas 75006 (Address of principal
executive offices)(Zip code)

Issuers telephone
number: (214) 731-8844

Securities registered
under Section 12 (g) of the Exchange Act:  Common stock, no par value

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

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

State
issuers revenues for its most recent fiscal year $0.

The aggregate market value of the
voting stock held by non-affiliates of the registrant on September 30, 2003, was $206,345.
The number of shares outstanding of the registrants common stock on September 30,
2003, was 72,078,710 shares. On July 25, 2004, the Company had 127,578,710 shares
outstanding.

PART I

Item 1. Description of
Business

(a) Business Development

Golden Chief Resources, Inc. (the
Company) was incorporated in the State of Kansas on November 16, 1976, under
the name of Arts Antique Autos, Ltd. The Company remained dormant for several years
and had no appreciable assets or revenues until 1981. On August 14, 1981, the name of the
corporation was changed to Golden Chief Resources, Inc. During September 1981, the Company
entered into concurrent transactions wherein the Company issued stock to two groups in
exchange for assets including cash, notes receivable, and working interests in oil and gas
leases. The Company also acquired interests in several mining leases and acquired
commercial real estate, which was used for the Companys offices with extra space
leased out to related parties.

Management abandoned the mining
project since it did not result in the production of sufficient quantities of minerals and
sold 50 percent of the investment in 1982. With the downturn of the real estate and oil
and gas economies during the mid 1980s, the Company was forced to sell, close or
abandon all of its oil and gas leases. The related companies which operated oil and gas
leases also failed during this period and discontinued operations. The mortgagor on the
Companys commercial real estate foreclosed on the property to satisfy the
outstanding mortgage.

This series of transactions resulted
in substantial losses of income and operating assets. Management decided to discontinue
any further business operations and completed the liquidation of the few remaining assets
during 1986. The Company had not operated since that time.

The Company initiated a new phase in
fiscal year 1998. Management filed the necessary documents with the State of Kansas to
reinstate its existence. Effective August 25, 1998, the Companys status with the
State of Kansas was reinstated and the Company remains in good standing and authorized to
engage in business as a Kansas corporation.

The Company continues to be in a
development stage and will remain so until it has begun significant operations and is
generating significant revenues.

During its fiscal year ended
September 30, 2002, the Company was not involved in any bankruptcy, receivership, or
similar proceeding and underwent no material reclassification, merger, or consolidation.
The Company does not anticipate involvement or participation in any of the above
proceedings. A change of management and control did occur on October 12, 1999 in which the
Company acquired a 10% working interest in the JFS Field in Dimmit County, Texas in
exchange for newly issued common stock.

(b) Business of Issuer

The Company is seeking a line of
business in which to enter, but the prospect is limited by the availability of sufficient
funds to pursue any line of business on a more active basis. The Company currently has two
employees.

The past business of the Company was
carried on by Arthur Sykes, Jr., Donald D. Roehrman, and Jereta Sykes.

(c) Reports to Security
Holders

The Company does not intend to
deliver an annual report to its security holders. The public may read and copy any
materials filed with the SEC, such as this Form 10-KSB and Form 10-QSB reports. The
Company is an electronic filer under the SECs EDGAR filing program. Accordingly, the
Companys filings are maintained by the SEC in a database at www.sec.gov and are
available to all security holders.

Item 2. Description of
Property

As of September 30, 2003, the Company
had minimal assets.

Previously the Company had oil and
gas operations and as such are and will be subject to federal, state and local laws and
regulations and by political developments. The domestic production and sale of oil and gas
are subject to federal regulation by the Department of Energy and the Federal Energy
Regulation Commission. Rates of production of oil and gas have for many years been subject
to federal and state conservation laws and regulations. In addition, oil and gas
operations are subject to extensive federal and state regulations concerning exploration,
development, production, transportation and pricing, and to interruption or termination by
governmental authorities.

The term working interest
as used herein means all or a fractional part of the ownership rights granted by a
concession or lease. The working interest, or a part thereof, pays all costs of operation
and is entitled to the gross production less royalties retained by the grantor or lessor
and less other royalties or non-operating interests created and assigned from the working
interest.

Gas Reserves

Please review the notes attached to
the financial statements which are made a part hereof.

Item 3. Legal Proceedings

As of July 25, 2004 there were no
legal proceedings to which the Company was a party, and no litigation is known to be
pending.

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

There have been no matters submitted
to a vote of securities holders since December 17, 2001 at which a special meeting of
shareholders was held in Dallas, Texas at which the Company agreed to effect a reverse
split of its common stock at a 1 for 10 ratio. This action was effective as soon as
practical and was effected in the trading of the Companys shares on January 2, 2002.
The meeting also approved the filing of an S-8 registration statement with the Securities
and Exchange Commission to allow the issuance of shares to consultants, advisors and
attorneys. The S-8 statement was filed on December 21, 2001. The meeting also approved the
change of corporate name to be determined at a later date by management. See Subsequent
Events below.

PART II

Item 5.  Market for Common
Equity and Related Stockholder Matters

(a) Market Information

The Company has no knowledge of
active trading during the current fiscal year.

The Companys common stock has been
traded on the over the counter bulletin board under the symbol GCHR. The stock began
trading in the Spring of 2000, and the following table shows the quarterly trading
information for the previous fiscal year as provided by the National Quotation Bureau.

|                   | Closing Bid | Closing Ask |   |  
|------------------ | ----------- | ----------- | - | -
|
|December 31, 2000  |             |             | $ |  
|March 31, 2001     |             |             | $ |  
|June 30, 2001      |             |             | $ | 0
|September 30, 2001 |             |             | $ | 0

As of July 25, 2004, certain options
have been granted to officers and key personnel as follows: 250,000 shares at an exercise
price of $0.10 per share with expiration period of December 31, 2005; and 50,000 shares at
an exercise price of $0.20 per share with expiration period of December 31, 2004. The
preceding numbers of shares have been adjusted for the 1 for ten reverse split effected
December 17, 2001

(b) Holders

As of July 25, 2004, there were
approximately 250 stockholders of record of the Companys common stock. Additional
stockholders hold stock in street names; the number of street name holders is not
available to the Company.

(c) Dividends

The Company has not declared or paid
dividends in the past, and does not anticipate doing so in the immediate future.

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

At the end of the previous fiscal
year the Companys management determined that continuing operation of the oil and gas
properties was not of economic benefit to the Company and entered into an agreement with
the Companys president whereby he agreed to accept the liabilities associated with
the properties and receive the properties from the Company. This transaction effectively
removed all producing properties and transferred them to the Companys president
along with the liabilities associated with them.

In order for the Company to proceed
an input of capital and or assets must be forthcoming. Management is actively seeking
both.

During the current fiscal year the
Company had no operations and incurred only minimal costs and expenses. In the previous
fiscal year the Company received oil and gas revenues of $35,213 and incurred lease
operating expenses of $68,461 and depletion of $6,913 which resulted in a gross loss of
$(40,161). The decreased revenues and expenses relative to the previous year are due to
the Companys decision to exit from the properties previously held.

In June 2003 the Company issued
5,000,000 shares to Jereta Sykes of Wichita, Kansas for the input of $5,000 which was used
to reduce the account payable to the Companys Executive Vice President.

On December 17, 2001 a special
meeting of shareholders was held in Dallas, Texas at which the Company agreed to effect a
reverse split of its common stock at a 1 for 10 ratio. This action was effective as soon
as practical and was effected in the trading of the Companys shares on January 2,
2002. The meeting also approved the filing of an S-8 registration statement with the
Securities and Exchange Commission to allow the issuance of shares to consultants,
advisors and attorneys. The S-8 statement was filed on December 21, 2001. The meeting also
authorized management to pursue changing the corporate name to more accurately reflect the
Companys current activities and business.

In December 2001 the Company issued
common shares pursuant to the S-8 filing to Steve Owen in the amount of 2,500,000 shares
valued at $175,000; Gene Maloney in the amount of 1,000,000 shares valued at $70,000; and
1,000,000 shares to Aden L. Vickers valued at $70,000. The shares to Mr. Owen were issued
pursuant to his agreement to provide specific consulting and advisory services in the area
of petroleum engineering, identification of possible asset acquisitions, and petroleum
geology services. The shares to Mr. Maloney were issued pursuant to his financial
consulting agreement with the Company. The shares to Mr. Vickers were issued as payment
for legal fees relative to the filing of the S-8 registration statement.

During the quarter ended March 31,
2002 the Company has issued an additional 9,100,000 shares pursuant to the S-8
registration statement as follows. Gene Maloney was issued 1,900,000 shares (valued at
$95,000) pursuant to his consulting agreement. Steve Owen was issued 6,000,000 shares
(valued at $420,000) pursuant to his consulting and advisory agreement. William Andrew
Stack was issued 200,000 shares (valued at $28,000) pursuant to his agreement to provide
certain legal services to the Company. 2,200,000 shares (valued at $238,000) were issued
to Dr. Sarvotham Chary who has agreed to provide advisory services in overseas markets.

During the quarter ended June 30,
2002 the Company has issued an additional 9,000,000 shares (valued at $180,000) pursuant
to the S-8 registration statement to consultants and attorneys pursuant to their agreement
to provide certain legal services to the Company. The Company also issued 800,000
restricted shares to Vision Publishing for market research services which were valued at
$12.000.

In September 2002, the Company issued
a total of 15,000,000 shares to the officers of the Company in exchange for their
agreement to waive and forego any benefit from their employment agreements and that the
Company shall cancel those agreements including stock option grants. A total of $698,060
had been accrued as salaries under the respective employment agreements.

At September 30, 2002 and 2001, the
Company has reserved 2,500,000 and 5,500,000 shares, respectively, of its authorized but
unissued common stock for possible future issuance in connection with the potential
exercise of stock options.

In October 2000, the directors agreed
to issue 4,924,500 shares to Red River Properties, Inc. in exchange for an additional 15%
working interest in the JFS oil and gas field. With this transaction, Red River and its
assignees controlled approximately 67% of the outstanding shares of the Company. The
Company entered into an agreement with Vision Publishing, Inc. of Parkland, Florida to
represent the Company in various matters concerning promotion and tracking the
Companys stock in exchange for 100,000 shares valued at $50,000.

In April 2001, the Company has issued
5,380,000 common shares to Red River Properties, Inc. in consideration for the assignment
of a 3.75% interest in the Kings ridge Field in Louisiana. This property is currently
producing a combination oil and gas field that has historically produced, but was only
returned to production in the year 2000.

In April 2001, the Company issued
300,000 common shares valued at $30,000 to its new management consultant. This issuance
represents the stock portion of the fee to be paid to the consultant for the first six
months of services. The Company is currently negotiating an end to this contract.

The Company also issued 100,000
common shares valued at $10,000 to an attorney as a retainer for legal services to be
provided to the Company.

During October 1999, the Company
issued 9,750,000 shares in exchange for a 10% working interest in the JFS Field in Dimmit
County, Texas. Also during the fiscal year ended September 30, 2000 the Company issued
122,600 shares for cash proceeds of $122,600 pursuant to a private placement, and
additionally the Company issued 50,000 to a public relations firm to gain an internet
presence for the Company, 150,000 shares were issued to a consultant to increase public
awareness of the Company, and in September 2000 the Company issued 400,000 shares in
exchange for 100,000 shares of a closely-held private oil and gas company.

Subsequent Events

Late in December of 2003 the Company
entered into an agreement with representatives of International Royalty and Oil Co. (IROC)
of Cisco, Texas in which IROC will provide funding for bringing the Companys SEC
filings up to date, and provide a certain amount of working capital to further the
Companys options in moving forward.

Income Taxes

See Note 6 to the
Financial Statements.

Disclosure Regarding
Forward-Looking Statements

This Form 10-KSB includes forward-looking
statements within the meaning of Section 27A of the Securities Act and the Company desires
to take advantage of the safe harbor provisions thereof. Therefore, the
Company is including this statement for the express purpose of availing itself of the
protections of such safe harbor provisions with respect to all of such forward-looking
statements. The forward-looking statements in this Form 10-KSB reflect the Companys
current views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties that could cause
actual results to differ from those anticipated. In the Form 10-KSB, the words
anticipates, believes, expects, intends,
future and similar expressions identify forward-looking statements. The
Company undertakes no obligation to publicly revise these forward-looking statements to
reflect events or circumstances that may arise after the date hereof. All subsequent
written and oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by this section.

Item 7. Financial
Statements

The financial statement information
for the Company is set forth immediately following the signature page of this Form 10-KSB.
See the Index to Financial Statements on page F-1.

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

In early 2004 the Company engaged
Clyde Bailey, CPA to prepare the audit of the Companys financial statements for the
fiscal year ending September 30, 2002 and 2003. The Company has had no disagreements on
accounting and financial disclosure with its auditor or the previous auditor.

PART III

Item 9.  Directors,
Executive Officers, Promoters and Control Persons

Each of the officers and directors
hold office for one year terms. None of the officers or directors have been involved in
any material legal proceedings. The following are the officers and directors of the
Company as of September 30, 2003:

|Name                | Age | Position | Director Since
|------------------- | --- | -------- | --------------
|James W. Landrum    |     |          |               
|Michael H. McIlvain |     |          |               
|Richard M. Hewitt   |     |          |               

Management.

James W. Landrum, age 54, Terrell,
Texas is President and a director. Mr. Landrum is a business administration graduate of
the University of Texas at Arlington. He has twenty years of experience in the oil and gas
industry with Lanco Energy and for his own account. Between 1995 and 1998, he was
President of Esco Elevators, Inc., an elevator manufacturing company, and Megalith Corp.,
a public company, both of Fort Worth, Texas. Megalith owned Esco Elevators as a
wholly-owned subsidiary.

Michael H. McIlvain, age 57, Tulsa,
Oklahoma is Executive Vice-President and a director of the Company. Mr. McIlvain holds BS
and MBA degrees from the University of Kansas. He has more than 20 years of experience in
the oil and gas business, mainly with Clinton Oil Co., Wichita, Kansas, and Rickelson Oil
and Gas Company, Tulsa, Oklahoma. Between 1994 and 1997, he was executive vice president
of BeneFund, Inc., a publicly held telecommunications company based in Tulsa.

Richard M. Hewitt, age 66, Trophy
Club, Texas is Secretary and a director. Mr. Hewitt is a graduate of Grinnell College and
Southern Methodist University School of Law and has been a licensed attorney in Texas
since 1963. Between 1964 and 1979, he was employed by the U.S. Securities and Exchange
Commission in Fort Worth, Texas. Mr. Hewitt has been in private practice in the Dallas,
Texas area since 1981 and has been a sole practitioner since 1992.

Item 10. Executive
Compensation

In September 2002, the Company issued
a total of 15,000,000 shares to the officers of the Company in exchange for their
agreement to waive and forego any benefit from their employment agreements and that the
Company shall cancel those agreements including stock option grants. A total of $698,060
had been accrued as salaries under the respective employment agreements.

Upon the change in control of the
Company discussed above the Company entered into employment agreements with both Mr.
Landrum and Mr. McIlvain. These employment agreements had an initial term of three years
and call for Mr. Landrum and Mr. McIlvain to receive salaries of $120,000 per year. In
March 2001, the Company entered into a three-year contract with its corporate secretary
providing for a salary of $50,000 per year along with standard benefits available to any
other employee. The Company is currently accruing these salaries pending the time that the
Companys cash position and liquidity can allow the officers to receive their
compensation.

On March 2, 2001 Mr. Landrum was
granted options to obtain up to 500,000 shares at $.10 per share through 12/31/2011; and
500,000 shares at $.20 per share through 12/31/2011. Mr. McIlvain was granted options to
obtain up to; 500,000 shares at $.10 per share through 12/31/2011; and 500,000 shares at
$.20 per share through 12/31/2011. Mr. Hewitt was granted options to obtain up to 500,000
shares at $.10 per share through 12/31/2011; and 500,000 shares at $.20 per share through
12/31/2011.

Item 11.  Security
Ownership of Certain Beneficial Owners and Management

The following is certain information
regarding the Companys common stock as of September 30, 2000 with respect to (a)
security ownership of each person known by the Company to own beneficially more than 5% of
the Companys common stock, and (b) security ownership of management.

Ownership at September
30, 2003

|Title of Class                                                                                                                                                                                                    | Name and Address
of Beneficial Owner                                                                                                                                                                                                                                                                                                                                    | Number of
Shares Owned                                                           | Percent
of Class                                     | Notes                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------------------------------------------------
|Common Stock 
No Par Value 
             
Common Stock 
No Par Value 
             
Common Stock 
No Par Value 
             
Common Stock 
No Par Value 
             
             

Common Stock 
No Par Value | James W. Landrum           
406 Griffith Avenue
Terrell, TX  75160
M. H. McIlvain             
3114 E. 83rd Street
Tulsa, OK  74137
Richard M. Hewitt          
202 Fresh Meadow Drive
Trophy Club, TX  72626
Red River Properties,Inc.

406 Griffith Avenue
Terrell, TX  75160         
Jereta M. Sykes            

All directors and officers
as a group (3 persons) | 22,014,500
  7,300,000
  5,247,000

 20,014,500
      
  5,185,000


 34,561,500 | 30.54% 
10.13% 
 7.28% 

28.32% 
  
 7.19% 


47.95% | See 1 below.
See 2 below.
See 3 below.

See 1 below.
 
See 5 below.

There are no family relationships between
the officers and directors.

|1. | Of Mr. Landrums shares 20,814,500 shares are held by Red River
          Properties, Inc. of which he is the President; 400,000 shares held by the 4 L-J
          Trust of which he is a Trustee; 400,000 shares held by the 4 L-K Trust of which
          he is a Trustee; 400,000 shares held by the 4 L-L Trust of which he is a
          Trustee; and 400,000 shares held by the 4 L-W Trust of which he is a Trustee.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Of Mr. McIlvains shares 400,000 are held by Elizabeth L. McIlvain, his
          wife; 100,000 held by Elizabeth L. McIlvain as custodian for a minor child; and
          the remaining 6,400,000 shares are held directly.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Mr. Hewitts shares are held as joint tenant with his wife Karen C. Hewitt
|-- | --------------------------------------------------------------------------

|4. | The directors include James W. Landrum, M. H. McIlvain, and Richard M. Hewitt.
          5. Mrs. Sykes acquired 5,000,000 shares in June of 2003 directly from the
          Company
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c) Changes in Control

None.

Item 12. Certain
Relationships and Related Transactions

At the end of the previous fiscal
year the Companys management determined that continuing operation of the oil and gas
properties was not of economic benefit to the Company and entered into an agreement with
the Companys president whereby he agreed to accept the liabilities associated with
the properties and receive the properties from the Company. This transaction effectively
removed all producing properties and transferred them to the Companys president
along with the liabilities associated with them.

During the year ended September 30,
2001, the Company acquired two additional oil and gas interests from Red River in exchange
for stock, again, as discussed at Note 4 to the financial statements. Red River continued
to collect the revenue from the Kingsridge lease through the end of the year. Certain
amounts were transferred to the Company by Red River resulting in a net decrease in the
receivable from Red River of $1,883. Accrued salaries increased by $269,167 and related
party accounts payable for unreimbursed expenses rose by $60,921 to $73,369. These amounts
are due to the Companys president and vice-president.

During the year ended September 30,
2000, the Company acquired an oil and gas property, as discussed at Note 4, from Red River
Properties, Inc., an entity controlled by its president. The Company also acquired an
investment in a nonmarketable security from Red River. At September 30, 2000, Red River
owed the Company $24,500 for funds received from investors who elected to receive stock of
the Company rather than another investment opportunity being offered by Red River.
Additionally, as shown on the Balance Sheet, the Company owes $237,006 to related parties.
Most of this money is due for accrued salaries, but a portion of it, $12,448, is for
unreimbursed employee business expenses.

Item 13.  Exhibits and
 Reports on Form 8-K

On December 19, 2001 a Form 8-K was
filed with the Securities and Exchange Commission disclosing the action taken at the
December 17, 2001 special meeting of shareholders at which the Company effected a 1 for 10
reverse split of its common shares and the Company was authorized to file an S-8
registration statement to allow it to issue shares to certain advisors, consultants and
attorneys.

SIGNATURES

In accordance with Section 13 or 15
(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|                     |                                                                                                                                                                                                                                            
|-------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date:  July 27, 2004 | GOLDEN CHIEF RESOURCES, INC.
 /s/   JAMES W. LANDRUM
   By: James W. Landrum, President,
   Chief Executive Officer,
 /s/   MICHAEL H. MCILVAIN
   By:  Michael H. McIlvain
   Executive vice President and
   Principal Accounting Officer

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

|Signature               | Title | Date
|----------------------- | ----- | ----
|/s/ JAMES W. LANDRUM    |       |     
|James W. Landrum        |       |     
|/s/ MICHAEL H. MCILVAIN |       |     
|Michael H. McIlvain     |       |     
|/s/ RICHARD M. HEWITT   |       |     
|Richard M. Hewitt       |       |     

GOLDEN CHIEF RESOURCES, INC.

FINANCIAL STATEMENTS

For the Years Ended September 30, 2003 and
2002

F-1

INDEPENDENT
AUDITORS REPORT

Board of DirectorsGolden
Chief Resources Inc.Dallas, Texas

We have audited the accompanying
balance sheet of Golden Chief Resources Inc., a development stage enterprise, as of
September 30 2003 and the related statements of income and expenses, statement of changes
in stockholders equity, and the statements of cash flows for the years ended
September 30, 2003 and 2002, and from restart of the development period in 1998 to
September 30, 2003. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these statements
based on our audit. We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for my opinion.In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of the Company as of September 30, 2003 and the results of its operations for the
years ended September 30, 2003 and 2002 and from restart of the development period in 1998
to September 30, 2003 in conformity with accounting principles generally accepted in the
United States.

The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. The Company
has limited operations currently and suffered recurring losses from operations. These
factors raise substantial doubt about the Companys ability to continue as a going
concern. This is further explained in the notes to financial statements.

Clyde Bailey, P.C. Certified Public
Accountant

San Antonio, TexasJuly 15, 2004

F-2

Golden Chief Resources Inc.
    (A Development Stage Enterprise)
    Balance Sheet
    As of September 30, 2003

|                                                                 | 
|---------------------------------------------------------------- | 
|A S S E T S                                                      | 
|Current Assets:                                                  | 
|Cash                                                             | 
|                                                                 | 
|Total Current Assets                                             | 
|Total Assets                                                     | 
|                                                                 | 
|L I A B I L I T I E S and S T O C K H O L D E R S' D E F I C I T | 
|Current Liabilities                                              | 
|Accounts Payable                                                 | 
|Accrued Expenses - Related Party                                 | 
|                                                                 | 
|                                                                 | 
|Total Current Liabilities                                        | 
|Stockholders' Deficit                                            | 
|Common Stock,                                                    | 
|no par value                                                     | 
|authorized 500,000,000 shares;                                   | 
|issued and outstanding                                           | 
|Additional Paid-In Capital                                       | 
|Accumulated Deficit                                              | 
|Deficit accumulated during the development stage                 | 
|                                                                 | 
|Total Stockholders' Deficit                                      | 
|Total Liabilities and Stockholders' Deficit                      | 
|                                                                 | 
|Golden Chief Resources Inc.                                      | 

The accompanying notes are an integral part of these financial statements

F-3

Golden Chief Resources Inc.
    (A Development Stage Enterprise)
    Statement of OperationsFor the Twelve Months Ended
   September 30

|                                      | 2003 | 2002 | Stage
|------------------------------------- | ---- | ---- | -----
|Revenues:                             |      |      |      
|Oil & Gas                             |      |      | $    
|Costs of Revenues:                    |      |     
|Lease Operating Expenses              |      |      | $    
|Depletion                             |      |      |      
|                                      |      |      |      
|Gross Profit (Loss)                   |      |      |      
|Operating Expenses:                   |      |     
|Director and officer compensation     |      |      |      
|Consulting fees                       |      |      |      
|Professional fees                     |      |      |      
|Public Relations                      |      |      |      
|Rent                                  |      |      |      
|Travel                                |      |      |      
|Other expense                         |      |      |      
|                                      |      |      |      
|                                      |      |      |      
|Operating Loss                        |      |      |      
|Other Income (Expense):               |      |     
|Gain on sale of marketable securities |      |      |      
|Gain on disposal of assets            |      |      |      
|Interest income                       |      |      |      
|                                      |      |      |      
|Loss from Continuing Operations       |      |      |      
|                                      |      |      |      
|Income Taxes                          |      |      |      
|Net Loss                              |      |      | $    
|                                      |      |      |      
|Basic loss per share                  |      |      | $    
|                                      |      |      |      
|Weighted average shares outstanding   |      |      |      
|                                      |      |      |      

The accompanying notes are an integral part of these financial statements

F-4

Golden Chief Resources Inc.
    (A Development Stage Enterprise)
    Statement of Changes in Stockholders' DeficitFrom the Period August 1998 to September 30, 2003

|                                       |  | Common StockShares | Common StockAmount | Additional
Paid In
Capital | Deficit
Accumulated
During the
Development
Stage | Accumulated
Deficit | Total
Stockholders'
Deficit | 
|-------------------------------------- |  | ------------------ | ------------------ | -------------------------- | ------------------------------------------------ | ------------------- | --------------------------- | 
|Balance October 1, 1996                |  |                    |                    |                            |                                                  |                     | 3,221,715                   | 
|Net loss                               |  |                    |                    |                            |                                                  |                     | --                          | 
|                                       |  |                    |                    |                            |                                                  |                     |                             | 
|Balance September 30, 1997             |  |                    |                    |                            |                                                  |                     | 3,221,715                   | 
|Stock issued for services and expenses |  |                    | 9/98               |                            |                                                  |                     | 1,594,100                   | 
|Net loss                               |  |                    |                    |                            |                                                  |                     | --                          | 
|                                       |  |                    |                    |                            |                                                  |                     |                             | 
|Balance September 30, 1998             |  |                    |                    |                            |                                                  |                     | 4,815,815                   | 
|Shares issued for:                     |  |                   
|Expenses                               |  |                    | 10/98              |                            |                                                  |                     | 568,892                     | 
|Marketable securities                  |  |                    | 12/98              |                            |                                                  |                     | 721,932                     | 
|Cash                                   |  |                    | 01/99              |                            |                                                  |                     | 33,000                      | 
|Marketable securities                  |  |                    | 02/99              |                            |                                                  |                     | 89,460                      | 
|Consulting                             |  |                    | 03/99              |                            |                                                  |                     | 50,000                      | 
|Cash                                   |  |                    | 04/99              |                            |                                                  |                     | 20,000                      | 
|Expenses                               |  |                    | 04/99              |                            |                                                  |                     | 20,000                      | 
|Cash                                   |  |                    | 07/99              |                            |                                                  |                     | 45,000                      | 
|Marketable securities                  |  |                    | 07/99              |                            |                                                  |                     | 137,500                     | 
|Net loss                               |  |                    |                    |                            |                                                  |                     |                             | 
|                                       |  |                    |                    |                            |                                                  |                     |                             | 
|Balance September 30, 1999             |  |                    |                    |                            |                                                  |                     | 6,501,599                   | 
|Shares issued for:                     |  |                   
|Oil and gas properties                 |  |                    | 10/99              |                            |                                                  |                     | 9,750,000                   | 
|Cash                                   |  |                    | 10/99              |                            |                                                  |                     | 25,000                      | 
|Cash                                   |  |                    | 11/99              |                            |                                                  |                     | 5,000                       | 
|Cash and subscription                  |  |                    | 12/99              |                            |                                                  |                     | 10,000                      | 
|Cash                                   |  |                    | 01/00              |                            |                                                  |                     | 5,100                       | 
|Cash                                   |  |                    | 02/00              |                            |                                                  |                     | 26,000                      | 
|Cash                                   |  |                    | 03/00              |                            |                                                  |                     | 14,500                      | 
|Cash                                   |  |                    | 06/00              |                            |                                                  |                     | 27,000                      | 
|Public relations services              |  |                    | 06/00              |                            |                                                  |                     | 50,000                      | 
|Professional services                  |  |                    | 07/00              |                            |                                                  |                     | 150,000                     | 

The accompanying notes are an integral part of these financial statements

F-5

|                                  |  |  |       |  |  |  |           
|--------------------------------- |  |  | ----- |  |  |  | ----------
|Cash                              |  |  | 08/00 |  |  |  | 10,000    
|Nonmarketable securities          |  |  | 09/00 |  |  |  | 400,000   
|Net loss                          |  |  |       |  |  |  |           
|                                  |  |  |       |  |  |  |           
|Balance September 30, 2000        |  |  |       |  |  |  | 16,974,199
|Shares issued for:                |  | 
|Oil and gas properties            |  |  | 10/00 |  |  |  | 4,924,500 
|Professional services             |  |  | 10/00 |  |  |  | 200,000   
|Options granted                   |  |  | 03/01 |  |  |  |           
|Oil and gas properties            |  |  | 04/01 |  |  |  | 5,380,000 
|Professional services             |  |  | 04/01 |  |  |  | 400,000   
|Net loss                          |  |  |       |  |  |  |           
|                                  |  |  |       |  |  |  |           
|Balance September 30, 2001        |  |  |       |  |  |  | 27,878,699
|Shares issued for:                |  | 
|Consulting services               |  |  | 12/01 |  |  |  | 3,500,000 
|Legal services                    |  |  | 12/01 |  |  |  | 1,000,000 
|Consulting services               |  |  | 01/02 |  |  |  | 2,900,000 
|Legal services                    |  |  | 01/02 |  |  |  | 200,000   
|Consulting services               |  |  | 02/02 |  |  |  | 6,000,000 
|Consulting services               |  |  | 03/02 |  |  |  | 1,200,000 
|Legal services                    |  |  | 04/02 |  |  |  | 4,000,000 
|Reverse asset acquisition         |  |  | 05/02 |  |  |  | (400,000  
|Legal services                    |  |  | 05/02 |  |  |  | 2,000,000 
|Professional services             |  |  | 06/02 |  |  |  | 800,000   
|Legal services                    |  |  | 06/02 |  |  |  | 3,000,000 
|Director and officer compensation |  |  | 09/02 |  |  |  | 15,000,000
|Net loss                          |  |  |       |  |  |  |           
|                                  |  |  |       |  |  |  |           
|Balance September 30, 2002        |  |  |       |  |  |  | 67,078,699
|Rounding                          |  |  |       |  |  |  | 11        
|Stock Issued                      |  |  | 05/03 |  |  |  | 5,000,000 
|Net loss                          |  |  |       |  |  |  |           
|                                  |  |  |       |  |  |  |           
|Balance September 30, 2003        |  |  |       |  |  |  | 72,078,710

The accompanying notes are an integral part of these financial statements

F-6

Golden Chief Resources Inc.
    (A Development Stage Enterprise)
     Statement of Cash Flows

|                                                      | For the Twelve Months Ended
September 30 | During the
Development |  
|----------------------------------------------------- | ---------------------------------------- | ---------------------- | -
|
|Net Loss                                              |                                          |                        | $
|Adjustments to reconcile net loss to net cash         |                                          |                       
|provided by operating activities:                     |                                          |                       
|Depletion                                             |                                          |                        |  
|Amortization of prepaid expenses                      |                                          |                        |  
|Gain on sale of marketable securities                 |                                          |                        |  
|Gain on disposal of assets                            |                                          |                        |  
|Stock Issued for Services                             |                                          |                        |  
|Change in assets and liabilities:                     |                                          |                       
|Decrease(increase) in:                                |                                          |                       
|Accounts receivable                                   |                                          |                        |  
|Increase(Decrease) in:                                |                                          |                       
|Accounts Payable                                      |                                          |                        |  
|Accrued expenses                                      |                                          |                        |  
|                                                      |                                          |                        |  
|Net Cash( Used in) Provided from Operating Activities |                                          |                        |  
|Cash Flows from Investing Activities:                 |                                          |                       
|Purchase oil and gas properties                       |                                          |                        |  
|Proceeds from sale of securities                      |                                          |                        |  
|Purchase of marketable securities                     |                                          |                        |  
|                                                      |                                          |                        |  
|Net Cash Used In Investing Activities                 |                                          |                        |  
|Cash Flows from Financing Activities:                 |                                          |                       
|Proceeds of stock sales                               |                                          |                        |  
|Proceeds of short term debt                           |                                          |                        |  
|Repayment from short term notes                       |                                          |                        |  
|Repayment of net profits interest payable             |                                          |                        |  
|                                                      |                                          |                        |  
|Net Cash Provided From Financing Activities           |                                          |                        |  
|Net Increase (Decrease) in Cash                       |                                          |                        |  
|Cash -Beginning of year                               |                                          |                        |  
|                                                      |                                          |                        |  
|Cash -End of year                                     |                                          |                        | $
|                                                      |                                          |                        |  

The accompanying notes are an integral part of these financial statements

F-7

|Supplementary Disclosure:                |  | 
|---------------------------------------- |  | 
|Cash Paid for Interest                   |  | 
|Cash Paid for Taxes                      |  | 
|Non-cash transactions:                   |  | 
|Shares Issued for Services               |  | 
|Various expenses                         |  | 
|Consulting                               |  | 
|Professional services                    |  | 
|Marketable securities                    |  | 
|Prepaid professional services            |  | 
|Prepaid public relations services        |  | 
|Non-Marketable securities                |  | 
|Value of options granted as compensation |  | 
|Fixed assets acquired with:              |  | 
|Oil and gas properties                   |  | 
|Net profits interest payable assumed in  |  | 
|purchase                                 |  | 

The accompanying notes are an integral part of these financial statements

F-8

Golden Chief Resources,
Inc. (A Development Stage
Enterprise)

Notes to Financial
Statements September 30, 2003

GENERAL INFORMATION

The Company was incorporated as Arts
Antique Autos, Ltd. in November 1976 in the State of Kansas. During the early 1980s
the Company engaged in oil and gas operating, mining, real estate operations. During the
mid 1980s, economic conditions caused the Company to lose its asset and revenue
base. Management decided to discontinue any further business operations and completed the
liquidation of the few remaining assets during 1986. The Company did not operate a line of
business until the year ended September 30, 2000. During the fiscal year ended September
30, 1998, new assets were contributed in an attempt to revive the Company. In October
1999, interests in oil and gas properties were contributed by third parties in exchange
for newly issued stock. This resulted in a change in control of the Company. In July of
2002, the Company abandoned the oil assets by transferring the assets to one of the
shareholders in exchange for the debt associated with the property. Managements
plans include efforts to raise operating and development capital followed by further
acquisition and development of oil and gas properties.

DEVELOPMENT STAGE
ENTERPRISE

Due to the loss of assets and
operations in 1986, the Companys current activity is the initiation of a new phase.
As a result, the Company has reemerged as a development stage enterprise. The Company will
continue to be considered to be in a development stage until it has begun significant
operations and is generating significant revenues.

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

LONG-LIVED ASSETS

Long-lived assets consist primarily
of property and equipment, excess of cost over net assets of acquired businesses, and
other intangible assets. The recoverability of long-lived assets is evaluated at the
operating unit level by an analysis of operating results and consideration of other
significant events or changes in the business environment. If an operating unit has
indications of impairment, such as current operating losses, the Company will evaluate
whether impairment exists on the basis of undiscounted expected future cash flows from
operations before interest for the remaining amortization period. If impairment exists,
the carrying amount of the long- lived asset is reduced to its estimated fair value, less
any costs associated with any final settlement. As of September 30, 2003, there was no
impairment of the Companys long-lived assets.

INCOME TAXES

Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets, including tax loss and credit carry-forwards,
and liabilities are measured using 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 deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. Deferred income tax expense
represents the change during the period in the deferred tax assets and deferred tax
liabilities. The components of the deferred tax assets and liabilities are individually
classified as current and non-current based on their characteristics. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The
Company has recorded a 100% valuation allowance against net deferred tax assets due to
uncertainty of their ultimate realization.

The Companys differences arise
principally from the difference in the way oil and gas assets are deducted and from the
deductibility of accrued salaries for financial statement and income tax purposes.

F-9

EARNINGS
PER SHARE

Accounting rules provide for the
calculation of Basic and Diluted earnings per share. Basic
earnings per common share excludes dilutive securities and is computed by dividing net
income available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per common share reflects the potential
dilution of securities that could share in the earnings of the entity on an as
if converted basis. This is done by dividing net income available to common
shareholders, as adjusted if necessary, by the weighted average number of common shares
outstanding plus potential dilutive securities. The Company had no dilutive securities
during 2003 or 2002.

CASH AND CASH EQUIVALENTS

The Company considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents for purposes of preparing its Statement of Cash Flows. The Company had no cash
equivalents at September 30, 2003.

FAIR VALUE OF FINANCIAL
INSTRUMENTS

Management estimates that the
carrying value of financial instruments reported in the financial statements approximates
their fair values.

USE OF ESTIMATES

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

CONCENTRATIONS

The Companys operations are all
in the oil and gas industry. As such, revenues, costs, etc. are subject to changes due to
national and international inventory levels, variations in consumption, and other discrete
factors. The Company currently owns interests in only two properties and deals with a
single operator on each property. Should anything happen to the operator of either
property, it is believed that a substitute operator would be available.

LEASE

The Company leases its office space
under a month-to-month lease. Rent expense totaled $1,800 for the year ended September 30,
2002.

Recent Accounting
Pronouncements

In April 2003, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS)
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities.
The Statement further clarifies accounting for derivative instruments. The company
believes the adoption of this Statement will have no material impact on its financial
statements.

In May 2003, the FASB issued
Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity,
(SFAS 150). SFAS 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. SFAS 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is effective
at the beginning of the first interim period beginning after June 15, 2003. We do not
believe the adoption of SFAS 150 will have a material impact on our consolidated
financial statements.

F-10

NOTE 2: OIL AND GAS
PROPERTIES

The Company acquired an interest in a
non-producing field during the year ended September 30, 2000. This field had produced gas
through 1992, but was shut in due to the low price of gas and the costs associated with
producing the gas and making it marketable. After reworking wells and production
equipment, the field was returned to production in January 2000. In September 2002, this
along with other oil & gas properties were transferred to an officer and major
shareholder in return for the liabilities associated with the oil & gas assets.

NOTE 3: STOCK TRANSACTIONS

In December 2001, a 1 for 10 reverse
split of the Companys stock was approved at a special stockholders meeting.
All share issuances and per- share information, along with option information, in the
financial statements and notes have been restated to reflect the effects of the reverse
split. It has been estimated that ten additional shares will be issued as a result of the
decision to round any stockholder of less than one share after the reverse split up to one
share.

During September 1998, the Board
approved the issuance of 1,594,100 shares of common stock to its President and Secretary
for past services provided to the Company valued at $1,000 and reimbursement of expenses
totaling $594.

During the quarter ended December 31,
1998, the Company issued 538,892 shares valued at $2,177 to officers and directors or
their assignees for expenses incurred on behalf of the Company. Additionally, 30,000
shares valued at $300 were issued for investment banking services and 721,932 shares
valued at $7,219 were issued to a related entity in exchange for marketable securities.
During the last three quarters ending September 30, 1999, the Company issued 98,000 shares
for $14,300 cash, 226,960 shares to related parties for marketable securities, and 70,000
shares valued at $14,000 for consulting and professional services.

During October 1999, the Company
issued 9,750,000 shares to Red River Properties, Inc. in exchange for a 10% working
interest in the JFS field in Dimmit County, Texas. Because this property was acquired from
a related party, carryover basis was used to record the property. The related party had no
basis in the property and the carryover basis was zero. During the year ended September
30, 2000, the Company issued 122,600 shares for cash proceeds of $122,600 pursuant to a
private placement memorandum. A public relations firm was issued 50,000 shares valued at
$50,000 for Internet promotion of the Company. A consultant was employed to increase
public awareness of the Company and assist with fund-raising programs in exchange for
150,000 shares valued at $135,000. In September 2000, 400,000 shares were issued in
exchange for 100,000 shares of a closely-held oil and gas company. This interest
represents less than 5% of the outstanding stock of the investee.

During October 2000, the Company
issued, 4,924,500 shares to Red River Properties, Inc. in exchange for an additional 15%
working interest in the JFS field. Red River had a $92,956 basis in this interest which
carried over since it is a related party. In acquiring this 15% interest, the Company took
the property subject to a $99,000 Net Profits Interest which will be paid before the
Company realizes any net cash flow from the interest. Also 200,000 shares valued at
$65,000 were issued during October 2000 for legal and public relations services. During
April 2001, the Company issued 5,380,000 shares to Red River for a 3.75% working interest
in the Kingsridge field in LaFourche Parish, Louisiana. This oil and gas producing field
immediately began yielding revenues to the Company. Red River had no basis in the property
and no basis was recorded on the Companys books for this purchase. Additionally,
400,000 shares valued at $40,000 were issued in April 2001 for legal and financial
consulting services.

In December 2001 the Company issued
common shares pursuant to the S-8 filing to Steve Owen in the amount of 2,500,000 shares
valued at $175,000; Gene Maloney in the amount of 1,000,000 shares valued at $70,000; and
1,000,000 shares to Aden L. Vickers valued at $70,000. The shares to Mr. Owen were issued
pursuant to his agreement to provide specific consulting and advisory services in the area
of petroleum engineering, identification of possible asset acquisitions, and petroleum
geology services. The shares to Mr. Maloney were issued pursuant to his financial
consulting agreement with the Company. The shares to Mr. Vickers were issued as payment
for legal fees relative to the filing of the S-8 registration statement.

During the quarter ended March 31,
2002 the Company has issued an additional 9,100,000 shares pursuant to the S-8
registration statement as follows. Gene Maloney was issued 1,900,000 shares (valued at
$95,000) pursuant to his consulting agreement. Steve Owen was issued 6,000,000 shares
(valued at $420,000) pursuant to his consulting and advisory agreement. William Andrew
Stack was issued 200,000 shares (valued at $28,000) pursuant to his agreement to provide
certain legal services to the Company. 2,200,000 shares (valued at $238,000) were issued
to Dr. Sarvotham Chary who has agreed to provide advisory services in overseas markets.

F-11

During the quarter ended June 30,
2002 the Company has issued an additional 9,000,000 shares (valued at $180,000) pursuant
to the S-8 registration statement to consultants and attorneys pursuant to their agreement
to provide certain legal services to the Company. The Company also issued 800,000
restricted shares to Vision Publishing for market research services which were valued at
$12.000.

In September 2002, the Company issued
a total of 15,000,000 shares to the officers of the Company in exchange for their
agreement to waive and forego any benefit from their employment agreements and that the
Company shall cancel those agreements including stock option grants. A total of $698,060
had been accrued as salaries under the respective employment agreements.

At September 30, 2003 and 2002, the
Company has reserved 2,500,000 and 5,500,000 shares, respectively, of its authorized but
unissued common stock for possible future issuance in connection with the potential
exercise of stock options.

NOTE 4: STOCK OPTIONS

At September 30, 2003, the Company
had outstanding options for the purchase of its common stock as presented below. These
options are related to employment agreements and services rendered to the Company.

|Exercise Price  | Exercise Period | # of Shares
|--------------- | --------------- | -----------
|$0.20 per share |                 |            
|$0.10 per share |                 |            
|                |                 |            
|Total           |                 |            
|                |                 |            

Changes in outstanding options during
the year were as follows:

|                                          | 
|----------------------------------------- | 
|Options outstanding at September 30, 2002 | 
|Cancelled                                 | 
|Expirations                               | 
|Grants                                    | 
|                                          | 
|Options outstanding at September 30, 2003 | 
|                                          | 

F-12

NOTE 5: INCOME TAXES

There is no provision for income tax
expense or benefit in 2003 or 2002. This is due to the fact there is no current
foreseeable taxable income against which to offset these losses. Net operating losses
available for carry-forward are presented in the table below.

|Year of
Expiration | Amount of Net
Operating Loss
Carry Forward
|------------------ | ------------------------------------------
|2018               |                                           
|2019               |                                           
|2020               |                                           
|2021               |                                           
|2022               |                                           
|2023               |                                           
|                   |                                           
|Total              |                                           

Income tax expense consists of the
following at September 30, 2003 and 2002:

|                             | 2003 | 2002
|---------------------------- | ---- | ----
|Current federal income taxes |      |     
|Current state income taxes   |      |     
|Current income tax expense   |      |     
|Deferred tax expense         |      |     
|                             |      |     
|                             |      |     
|                             |      |     

The following table presents a
reconciliation of income tax calculated at the statutory Federal rate to the
Companys income taxes.

|                                               | 2003 | 2002
|---------------------------------------------- | ---- | ----
|Tax calculated on financial statement net loss |      |     
|Amortization and deduction of oil and gas      |      |     
|properties                                     |      |     
|Nondeductible expenses                         |      |     
|Deferral of accrued salaries                   |      |     
|Net operating loss available for carry forward |      |     
|                                               |      |     
|Provision for income taxes                     |      |     
|                                               |      |     

As discussed at Note 1, deferred tax
assets and liabilities consist of the following:

|                                        |  |  |  | 
|--------------------------------------- |  |  |  | 
|Deferred federal tax liability          |  |  |  | 
|Deferred state tax liability            |  |  |  | 
|Total Deferred Tax Liabilities          |  |  |  | 
|Deferred federal tax asset              |  |  |  | 
|Deferred state tax asset                |  |  |  | 
|Less valuation allowance                |  |  |  | 
|Total Deferred Tax Assets               |  |  |  | 
|Net Deferred Tax Assets and Liabilities |  |  |  | 

F-13

Although the Company has net
operating loss carry-forwards as indicated above, it is not foreseeable when or if
benefits arising from these losses will be realized. Due to this uncertainty, a valuation
allowance has been established to defer recognition of any benefit until it becomes
reasonably clear that these benefits will be utilized.

The following temporary differences
gave rise to deferred tax assets/(liabilities):

|                                  | 2003 | 2002 |    
|--------------------------------- | ---- | ---- | ---
|Accrued salaries and options      |      | $    | -0-
|Fixed assets                      |      |      | -0-
|Net operating loss carry-forwards |      |      | -0-

NOTE 6: RELATED PARTY
TRANSACTIONS

For the year ended September 30,
2002, the oil & gas properties were transferred to the Companys President in
exchange for the liabilities associated with the assets. Stock was issued to the officers
in exchange for the accrued salaries and stock options.

NOTE 7: EMPLOYMENT
CONTRACTS

In March 2000, the Company entered
into employment contracts which were made effective to October 12, 1999, and run through
October 2002 (not including automatic annual renewals thereafter) with its president and
vice-president. These contracts provide for salaries of $120,000 per year which are to be
accrued if not paid, options to purchase specified numbers of shares, and other standard
employee benefits should the Company elect to provide them to any employee. In March 2001,
the Company entered into a three-year contract with its corporate secretary providing for
a salary of $50,000 per year along with standard benefits available to any other employee.
The aggregate commitment under these contracts for future salaries at September 30, 2000,
excluding stock options and other possible compensation, was approximately $373,000. In
September 2002, the Company and the officers agreed to cancel the employment contracts by
issuing a total of 15,000,000 shares of stock.

NOTE 8: EARNINGS PER SHARE

The following table sets forth the
computation of basic and diluted earnings per common share (EPS) for the years ended
September 30, 2003 and 2002.

|                                          | 2003 | 2002
|----------------------------------------- | ---- | ----
|Numerator:                                |      |     
|Net income from continuing operations     |      |     
|                                          |      |     
|Denominator:                              |      |     
|Basic weighted average shares outstanding |      |     
|Dilutive options                          |      |     
|                                          |      |     
|Denominator for diluted EPS               |      |     
|                                          |      |     
|Earnings/(loss) per share:                |      |     
|Basic                                     |      |     
|Diluted                                   |      |     

NOTE 9: GOING CONCERN

As discussed in the General
Information regarding the Development Stage Enterprise, the Company had no substantial
operations between 1986 and September 30, 1999. Since that date, the Company has generated
some new capital, as indicated above, and has acquired interests in oil and gas leases
which are producing revenues. However, such revenues have yet to significantly overcome
sizable lease operating expenses. Managements plans consist primarily of the
generation of significant new capital. Should management prove unsuccessful in its
fund-raising efforts, the Company is not in any real danger of dissolution as long as the
officers and directors are willing to pay the nominal costs of keeping it in good
standing. Management continues to seek opportunities to acquire additional oil and gas
interests or to identify a viable merger candidate. No predictions can be made as to the
success of these plans.