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


                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1


(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     FOR THE FISCAL YEAR ENDED MAY 31, 2005

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the transition period from                   to
                                    ------------------   --------------

                         Commission file number: 0-28627

                            PATCH INTERNATIONAL INC.
                 (Name of small business issuer in its charter)

                    NEVADA                                87-0393257
         (State or other jurisdiction                  (I.R.S. Employer
       of incorporation or organization)              Identification No.)

   666 BURRARD STREET, SUITE 1220, VANCOUVER, BRITISH COLUMBIA V6C 2X8 CANADA
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (604) 688-7640

       Securities registered under Section 12(b) of the Exchange Act: NONE

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

                          COMMON STOCK, $.001 PAR VALUE
                                (Title of class)


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


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

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No

State issuer's revenues for its most recent fiscal year:  $108,411

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days: $5,707,356 AS OF SEPTEMBER 9, 2005

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date:  5,356,559 SHARES OF COMMON STOCK AS
OF SEPTEMBER 9, 2005

Transitional Small Business Disclosure Format (Check one):    Yes     ; No  X
                                                                 -----    -----

<PAGE>

                                     PART I

         The registrant is filing this amendment to reflect the correction in an
amount  that  appeared  in  Item  1.  below.  Instead  of  560,000  shares,  the
description   regarding  the  proposed  distribution  should  have  referred  to
5,600,000 Pharmaxis shares. Note 9 of the notes to the financial  statements has
also been corrected.


ITEM 1.  DESCRIPTION OF BUSINESS.

         The   Company's   business   originally   was   the   development   and
commercialization of non-prescription  therapeutics and nutraceuticals  designed
to prevent inflammation and their sequelae, and the development of cosmetics for
skin conditions.  The Company had not generated any revenues from product sales,
royalties or license fees. Due to the inability of the Company to obtain funding
and/or partners to pursue its pharmaceutical  projects, it decided to seek other
business  opportunities.  On October  20,  2003,  the  Company  entered  into an
Arrangement  Agreement to acquire  Patch Energy Inc., a  privately-held  company
existing under the CANADA BUSINESS CORPORATIONS ACT ("Patch").

         Patch's  principal  business has been the exploration,  development and
production  of oil and natural gas  reserves  through  participation  in farmout
arrangements  where third  parties act as the operator of the  project.  Patch's
main focus had been on its assets  located in the Kerrobert area in the Province
of Saskatchewan, Canada. Principal capital expenditures of Patch through May 31,
2005 have been US$330,291 for the acquisition,  exploration,  and development of
its interests in the oil and gas properties.

         At the Patch  shareholders'  meeting on February  20,  2004,  the Patch
shareholders approved the Plan of Arrangement. As of March 15, 2004, the Company
acquired Patch as a wholly-owned subsidiary.

         On June 15, 2004,  the Company  changed its domicile to Nevada and name
by merging into its wholly-owned subsidiary,  Patch International Inc., a Nevada
corporation.

BACKGROUND AND CORPORATE STRUCTURE

         The Company was  incorporated as Praxis  Pharmaceuticals,  Inc. on June
20, 1997 under the laws of the State of Nevada ("Praxis-Nevada").  In June 1998,
Praxis-Nevada  engaged in a reverse  acquisition  transaction with  Micronetics,
Inc.,  a  company   incorporated  in  Utah  on  December  31,  1981,  where  the
shareholders of Praxis-Nevada gained control over Micronetics.  Micronetics then
changed its name to Praxis  Pharmaceuticals  Inc.  Immediately after the reverse
acquisition  transaction,  the shareholders of Praxis-Nevada  held approximately
98% of the outstanding shares of the Company.  Praxis-Nevada was merged into the
Company  effective  June  30,  2002,  thereby  eliminating  Praxis-Nevada  as  a
subsidiary of the Company.

         A wholly owned Australian subsidiary,  Praxis Pharmaceuticals Australia
Pty.  Ltd.  (ACN 082 811 630) was  formed in May 1998 as a private  company.  In
October 1999 an equity  investment  was made in this  subsidiary  by  Rothschild
Bioscience  Managers  Limited  (now known as GBS Venture  Partners  Ltd),  which
reduced the  Company's  equity  ownership to 35%. The funds raised were used for
the development of autoimmune  disease  research  licensed from Anutech Pty Ltd,
the  development  arm of the Australian  National  University.  Praxis-Australia
changed  its  name to  "Pharmaxis  Ltd"  in  June  2002.  An  additional  equity
investment  was made in Pharmaxis in August 2002,  which  reduced the  Company's
equity ownership to 19.6%. The Company's equity ownership was further reduced to
10.4% upon  completion  of an initial  public  offering by Pharmaxis in November
2003, and currently stands at 8.6%.  Pharmaxis is listed on the Australian Stock
Exchange  under the  symbol  "PXS".  Pharmaxis  is a  specialist  pharmaceutical
company committed to the research,  development and  commercialization  of human
therapeutic  products for chronic  respiratory  and autoimmune  diseases and the
development of an improved lung function test.

         The Pharmaxis  shares are  restricted  from trading until  November 11,
2005.  The Company is proposing the  distribution  of a dividend of 5,600,000 of
its 11,200,000  Pharmaxis  shares on or after November 11, 2005, to shareholders
of record as of July 30, 2004.


                                       2
<PAGE>


         A second wholly owned  Australian  subsidiary,  Praxis  Pharmaceuticals
International Pty. Ltd. (ACN 092 654 870)  ("Praxis-International"),  was formed
on May 2, 2000. Praxis-International was dissolved effective March 3, 2004.

         As of March 15, 2004, the Company consummated the Arrangement Agreement
with Patch under which the Company acquired Patch, a privately-held  oil and gas
company continued under the laws of Canada, in a stock-for-stock transaction. As
a result of the acquisition,  Patch is a wholly owned subsidiary of the Company.
In the  arrangement,  each issued  common share of Patch was  exchanged  for one
common share of the Company.  A total of 1,823,262 shares were issued,  bringing
the issued and outstanding shares of the Company to 3,822,437. David Stadnyk, an
officer and director of the Company,  controlled approximately two-thirds of the
Patch shares, and now controls  approximately 21.8% of the outstanding shares of
the Company.

         As of July 25, 2005, the Company  effected a 1-for-10  reverse split of
its common  stock.  All share amounts have been adjusted to reflect this reverse
split unless otherwise noted.

HISTORY AND DEVELOPMENT OF PATCH ENERGY INC.

         DEVELOPMENT OF PATCH. Patch was incorporated on February 11, 2002 under
the name "Patch Energy Inc." by  registration  of Memorandum  and Articles under
the COMPANY ACT of British Columbia,  Canada.  Effective January 16, 2003, Patch
continued jurisdiction of incorporation from the COMPANY ACT of British Columbia
to the  CANADA  BUSINESS  CORPORATIONS  ACT and as a result  is now a  federally
incorporated company.

         THE  BUSINESS  OF  PATCH.  Patch's  principal  business  has  been  the
exploration,  development and production of oil and natural gas reserves through
participation in farmout arrangements where third parties act as the operator of
the project.  Patch's main focus had been on its assets located in the Kerrobert
area in the Province of Saskatchewan, Canada.

PRINCIPAL PRODUCTS

         Patch conducts  exploration  activities to locate natural gas and crude
petroleum.  Patch  produces light crude oil in  Saskatchewan  and natural gas in
California.  Such products are  generally  sold at the wellhead to purchasers in
the immediate area where the products are produced.

COMPETITION

         Oil and gas exploration and acquisition of undeveloped  properties is a
highly  competitive  and speculative  business.  Patch competes with a number of
other companies,  including major oil companies and other independent  operators
which are more  experienced and which have greater  financial  resources.  Patch
does not hold a significant competitive position in the oil and gas industry.

GOVERNMENTAL REGULATION/ENVIRONMENTAL ISSUES

         Patch's  oil  and  gas  operations  are  subject  to  various  federal,
provincial and local  governmental  regulations.  Matters  subject to regulation
include  discharge  permits for drilling  operations,  drilling and  abandonment
bonds,  reports  concerning  operations,  the  spacing of wells,  and pooling of
properties  and taxation.  From time to time,  regulatory  agencies have imposed
price controls and  limitations on production by restricting the rate of flow of
oil and gas wells below actual production capacity in order to conserve supplies
of oil and gas. The production,  handling, storage,  transportation and disposal
of oil and gas, by-products thereof, and other substances and materials produced
or used in connection with oil and gas operations are also subject to regulation
under  federal,  state,  provincial  and  local  laws and  regulations  relating
primarily  to the  protection  of human  health  and the  environment.  To date,
expenditures  related to  complying  with these  laws,  and for  remediation  of
existing environmental  contamination,  have not been significant in relation to
the results of operations of Patch.  The  requirements  imposed by such laws and
regulations are frequently changed and subject to  interpretation,  and Patch is
unable to predict the ultimate cost of  compliance  with these  requirements  or
their effect on its operations.


                                       3
<PAGE>

         Patch is subject to laws and regulations  that control the discharge of
materials  into  the  environment,   require  removal  and  cleanup  in  certain
circumstances,  require the proper  handling and disposal of waste  materials or
otherwise relate to the protection of the  environment.  In operating and owning
petroleum  interests,  it may be liable for  damages  and the costs of  removing
hydrocarbon  spills for which Patch would be held responsible.  Laws relating to
the  protection  of the  environment  have in  many  jurisdictions  become  more
stringent  in recent  years and may,  in certain  circumstances,  impose  strict
liability,  rendering  Patch liable for  environmental  damage without regard to
actual negligence or fault. Such laws and regulations may expose it to liability
for the conduct of, or conditions caused by, others or for acts of Patch.  Patch
believes  that  it  has  complied  in  all  material  respects  with  applicable
environmental laws and regulations.

EMPLOYEES

         As of August 31, 2005, the Company had 1 full-time employee.

         The Company's opportunity for success depends largely upon the efforts,
abilities, and decision-making of its directors and executive officers. The loss
any of the Company's key personnel  could, to varying  degrees,  have an adverse
effect on its operations and research and development  efforts.  The loss of any
one of them would have a material  adverse  affect on the  Company.  The Company
does not currently maintain "key-man" life insurance on its executive officers.


ITEM 7.  FINANCIAL STATEMENTS.

         See pages beginning with page F-1.


ITEM 13. EXHIBITS.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
REGULATION                                                                                     SEQUENTIAL
S-B NUMBER                                 EXHIBIT                                             PAGE NUMBER
-----------------------------------------------------------------------------------------------------------
<S>            <C>                                                                                  <C>
  2.1          Stock Exchange Agreement with Micronetics, Inc. (1)<F1>                              N/A
-----------------------------------------------------------------------------------------------------------
  2.2          Arrangement Agreement made among Praxis Pharmaceuticals Inc. and Patch               N/A
               Energy Inc. dated as of October 20, 2003 (2)<F2>
-----------------------------------------------------------------------------------------------------------
  2.3          Articles of Merger Merging Praxis Pharmaceuticals Inc., a Utah Corporation,          N/A
               into Patch International Inc., a Nevada Corporation (3)<F3>
-----------------------------------------------------------------------------------------------------------
  3.1          Articles of Incorporation, as amended (8)<F8>                                        N/A
-----------------------------------------------------------------------------------------------------------
  3.2          Bylaws (8)<F8>                                                                       N/A
-----------------------------------------------------------------------------------------------------------
  3.3          Certificate of Change Pursuant to NRS 78.209 (4)<F4>                                 N/A
-----------------------------------------------------------------------------------------------------------
 10.1          1999 Stock Option Plan (1)<F1>                                                       N/A
-----------------------------------------------------------------------------------------------------------
 10.2          Shareholders Agreement dated August 23, 2002 among Praxis Pharmaceuticals            N/A
               Inc., Perpetual Trustees Nominees Limited, Rothschild Bioscience Managers
               Limited, CM Capital Investments Pty Ltd, CIBC Australia VC Fund LLC,
               Mooroolbark Technology Pty Ltd, The Australian National University and
               Pharmaxis Pty Ltd, Dr. William Cowden and Dr. Brett Charlton (5)<F5>
-----------------------------------------------------------------------------------------------------------

                                       4
<PAGE>



<CAPTION>
-----------------------------------------------------------------------------------------------------------
REGULATION                                                                                     SEQUENTIAL
S-B NUMBER                                 EXHIBIT                                             PAGE NUMBER
-----------------------------------------------------------------------------------------------------------
<S>            <C>                                                                                  <C>
 10.3          Management services agreement between Patch Energy Inc. and David Stadnyk            N/A
               dated February 11, 2002 (6)<F6>
-----------------------------------------------------------------------------------------------------------
 10.4          Letter agreement dated February 18, 2004 regarding Termination Agreement             N/A
               with Fairchild International Corporation (6)<F6>
-----------------------------------------------------------------------------------------------------------
 10.5          2004 Stock Option Plan (7)<F7>                                                       N/A
-----------------------------------------------------------------------------------------------------------

 10.6          Assumption and Cancellation of Debt agreements with Fairchild International          N/A
               Corporation dated April 15, 2005 (8)<F8>

-----------------------------------------------------------------------------------------------------------

 10.7          Management services agreement with David Stadnyk dated May 1, 2005 (8)<F8>           N/A

-----------------------------------------------------------------------------------------------------------

 10.8          Change of Control Agreement with David Stadnyk dated May 1, 2005 (8)<F8>             N/A

-----------------------------------------------------------------------------------------------------------

  21           Subsidiaries of the registrant (8)<F8>                                               N/A

-----------------------------------------------------------------------------------------------------------
 31.1          Rule 13a-14(a) Certification of Principal Executive and Financial Officer
-----------------------------------------------------------------------------------------------------------
 32.1          Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002
-----------------------------------------------------------------------------------------------------------
------------------
<FN>
(1)<F1>  Incorporated by reference to the exhibits  filed with the  Registration
         Statement on Form 10-SB, file no. 0-28627.
(2)<F2>  Incorporated  by  reference to the exhibits filed with the registrant's
         current report on Form 8-K dated March 15, 2004.
(3)<F3>  Incorporated by reference  to the exhibit  filed with the  registrant's
         current report on Form 8-K dated June 15, 2004.
(4)<F4>  Incorporated  by  reference to  the exhibit filed with the registrant's
         current report on Form 8-K dated July 8, 2005.
(5)<F5>  Incorporated by reference to  the exhibits  filed with the registrant's
         annual report on Form 10-KSB for the fiscal year ended May  31, 2002.
(6)<F6>  Incorporated by reference to the exhibits  filed with the  registrant's
         annual report on Form 10-KSB for the fiscal year ended May 31, 2004.
(7)<F7>  Incorporated by reference to the exhibits  filed with the  registrant's
         registration  statement  on  Form S-8, file  number  333-120277,  filed
         November 8, 2004.

(8)<F8>  Filed as an exhibit to the  registrant's  annual  report on Form 10-KSB
         for the fiscal year ended May 31, 2005, filed September 14, 2005.

</FN>
</TABLE>

                                   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.

                                       PATCH INTERNATIONAL INC.



Date:  September 15, 2005              By:  /s/ DAVID STADNYK
                                          --------------------------------------
                                               David Stadnyk, President





                                       5

<PAGE>

                        CONSOLIDATED FINANCIAL STATEMENTS


                                  MAY 31, 2005
                            (Stated in U.S. Dollars)




                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders of
Patch International Inc.

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Patch
International  Inc.  as of May 31, 2005 and 2004,  and the related  consolidated
statements of operations,  shareholders' equity (deficiency), and cash flows for
the  years  ended May 31,  2005 and 2004.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with 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  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Patch International Inc. as of
May 31, 2005 and 2004, and the results of their  operations and their cash flows
for the  years  ended May 31,  2005 and  2004,  in  conformity  with  accounting
principles generally accepted in the United States of America

These  financial  statements  have been prepared  assuming that the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
unless  the  company  attains  future   profitable   operations  and/or  obtains
additional financing,  there is substantial doubt about the Company's ability to
continue as a going concern.  Management's plans in regards to these matters are
discussed in Note 1. The  financial  statements  do not include any  adjustments
that might result from the outcome of the uncertainty.

As  discussed  in  Note  16  to  its  consolidated   financial   statements  the
accompanying consolidated financial statements of Patch International Inc. as of
May 31, 2004 and for the year ended have been restated.



Vancouver, B.C.                                   /s/ Morgan & Company

August 10, 2005                                   Chartered Accountants








                                      F-1


<PAGE>

PATCH INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars)


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                          MAY 31,             MAY 31,
                                                                                            2005               2004
------------------------------------------------------------------------------------------------------------------------
                                                                                                            (RESTATED -
                                                                                                             NOTE 16)
<S>                                                                                 <C>                <C>
ASSETS

Current Assets
     Cash                                                                           $        128,872   $         38,613
     Accounts receivable                                                                      21,754             35,327
     Trading securities (Note 5)                                                                   -             28,334
     Prepaid expenses and other                                                                1,230             71,330
------------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                                         151,856            173,604
Property and equipment, net                                                                    2,074                  -
Oil and gas interests (successful efforts method) (Note 7)                                   198,284            130,440
Available-for-sale securities (Note 6)                                                     6,007,000                  1
------------------------------------------------------------------------------------------------------------------------

Total Assets                                                                        $      6,359,214   $        304,045
========================================================================================================================

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

 Current Liabilities
     Accounts payable and accrued liabilities                                       $        250,592   $        211,952
     Due to related parties (Note 8)                                                         342,813            250,388
------------------------------------------------------------------------------------------------------------------------

Total Current Liabilities                                                                    593,405            462,340
------------------------------------------------------------------------------------------------------------------------

 Going Concern (Note 1)

STOCKHOLDERS' EQUITY

 Preferred stock:
 1,000,000 preferred shares authorized with par value of $0.001 per share; none
 issued and outstanding                                                                            -                  -

 Common stock:
 10,000,000 common shares authorized (2004 - 100,000,000) with par value of
 $0.001 per share;
 5,101,364 shares issued and outstanding (2004 - 4,028,843 shares)                             5,101              4,028

 Additional paid-in capital                                                                1,418,489            475,994

Stock subscriptions receivable                                                                (4,000)                 -

Accumulated other comprehensive income  (Note 10)                                          6,006,999                  -

 Deficit                                                                                  (1,660,780)          (638,317)
------------------------------------------------------------------------------------------------------------------------

Total Stockholders' Equity (Deficit)                                                       5,765,809           (158,295)
------------------------------------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity (Deficit)                                $      6,359,214   $        304,045
========================================================================================================================

</TABLE>


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

                                      F-2
<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED      YEAR ENDED
                                                                                          MAY 31,        MAY 31,
                                                                                            2005           2004
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>
Revenue
     Oil and gas                                                                     $      97,415     $   115,463
     Gain on sale of trading securities                                                          -           6,150
     Gain on relinquishment of oil and gas properties                                       10,996               -
----------------------------------------------------------------------------------------------------------------------

                                                                                           108,411         121,613
----------------------------------------------------------------------------------------------------------------------

Expenses
     Consulting                                                                            178,236          29,500
     Depletion, depreciation and impairment                                                 59,097          57,889
     Investor relations                                                                    189,782          69,495
     General and administrative                                                            142,061          45,914
     Oil and gas production, royalties and other                                            26,904         108,378
     Professional fees                                                                      98,271          69,909
     Related party administration                                                          115,239          72,000
     Stock-based compensation                                                              284,354         203,400
     Loss on write-off of proposed acquisition                                              21,000               -
     Loss on sale of trading securities                                                     15,930               -
----------------------------------------------------------------------------------------------------------------------

                                                                                         1,130,874         656,485
----------------------------------------------------------------------------------------------------------------------

Net Loss for the Year                                                                $  (1,022,463)    $  (534,872)
======================================================================================================================

Net Loss Per Share
     Basic and diluted                                                               $      (0.23)     $     (0.24)

Weighted Average Number Of Common Shares Outstanding
     Basic and diluted                                                                   4,457,000       2,222,000


</TABLE>







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


                                      F-3

<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)


<TABLE>
<CAPTION>
                                                                                                YEAR ENDED       YEAR ENDED
                                                                                                  MAY 31,         MAY 31,
                                                                                                   2005             2004
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>                <C>

Cash Flows from Operating Activities
     Net loss for the year                                                                  $   (1,022,463)    $    (534,872)
     Add back non-cash items:
         Depletion, depreciation and impairment                                                     59,097            57,889
         Loss (gain) on sale of trading securities                                                  15,930            (6,150)
         Gain on relinquishment of oil and gas                                                     (10,996)                -
         Write-off of oil and gas property                                                               -            57,604
         Write-off of proposed acquisition                                                          21,000                 -
         Stock based compensation                                                                  284,354           203,400

     Change in non-cash operating assets and liabilities:
         Decrease in accounts receivable                                                            13,573             3,100
         Increase (decrease) in prepaid expenses and other                                          39,474           (63,953)
         Increase in accounts payable and accrued liabilities                                      188,784            73,348
         Increase in due to related parties                                                        103,421            67,025
-----------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                                                             (307,826)         (142,609)
-----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
     Cash acquired in business combination                                                               -             1,034
     Cash paid for proposed acquisition                                                            (21,000)                -
     Oil and gas interests                                                                         (68,536)         (136,056)
     Acquisition of equipment                                                                       (2,593)                -
     Acquisition of trading securities                                                              (1,655)           (3,772)
     Proceeds on sale of trading securities                                                         14,059            30,488
-----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                              (79,725)         (108,306)
-----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
     Stock subscriptions received                                                                        -             1,700
     Common stock issued for cash                                                                  477,810           250,275
-----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                                          477,810           251,975
-----------------------------------------------------------------------------------------------------------------------------
Change in cash for the year                                                                         90,259             1,060

Cash, beginning of year                                                                             38,613            37,553
-----------------------------------------------------------------------------------------------------------------------------
Cash, end of year                                                                           $      128,872     $      38,613
=============================================================================================================================


NON-CASH FINANCING ITEMS
     Common stock issued for debt                                                           $        52,164    $           -
     Stock options exercised for debt                                                               125,240                -

SUPPLEMENTAL CASH FLOW INFORMATION
     Taxes paid                                                                             $             -    $           -
     Interest paid                                                                                        -                -
</TABLE>



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

                                      F-4
<PAGE>
PATCH INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Stated in U.S. Dollars)


<TABLE>
<CAPTION>
                                                                                              ACCUMULATED
                                           COMMON STOCK         CAPITAL IN      STOCK            OTHER
                                    -------------------------    EXCESS OF   SUBSCRIPTIONS   COMPREHENSIVE
                                        SHARES       AMOUNT      PAR VALUE     RECEIVABLE        INCOME       DEFICIT       TOTAL
                                    ------------------------------------------------------------------------------------------------
<S>                                 <C>          <C>           <C>          <C>            <C>            <C>           <C>

Balance, May 31, 2002                         1  $         -   $         -  $         -    $         -    $   (24,396)  $   (24,396)

Common stock issued for cash
 at $0.001                           11,669,999       11,670             -            -              -              -        11,670

Common stock issued for cash
 at $0.02                             5,000,000      100,000             -            -              -              -       100,000

Common stock issued for cash
 at $0.10                               667,000       66,700             -            -              -              -        66,700

Stock subscription receivable                 -       (1,700)            -            -              -              -        (1,700)

Net loss for the year                         -            -             -            -              -        (79,049)      (79,049)
                                    ------------------------------------------------------------------------------------------------

Balance, May 31, 2003                17,337,000      176,670             -            -              -       (103,445)        73,225

Stock subscription received                   -        1,700             -            -              -              -         1,700

Common stock issued for cash
 at $0.08                               895,625       71,650             -            -              -              -        71,650

Adjustment to number of common
 stock issued and outstanding as
 a result of the acquisition
 of Patch Energy Inc.
    Patch Energy Inc.               (18,232,625)    (250,020)            -            -              -              -      (250,020)

    Praxis Pharmaceuticals, Inc.      2,063,081        2,063       247,957            -              -              -        250,020

Fair value of shares issued in
 connection with the acquisition
 of Patch Energy Inc.                 1,823,262        1,823      (153,846)           -              -              -      (152,023)

Stock options exercised                 142,500          142       178,483            -              -              -       178,625

Stock based compensation                      -            -       203,400            -              -              -       203,400

Net Loss for the year                         -            -             -            -              -       (534,872)     (534,872)
                                    ------------------------------------------------------------------------------------------------

Balance, May 31, 2004                 4,028,843        4,028       475,994            -              -       (638,317)     (158,295)

Stock options exercised for cash        831,800          832       480,978       (4,000)             -              -       477,810

Stock options exercised for debt        188,557          189       125,051            -              -              -       125,240

Stock issued for debt                    52,164           52        52,112            -              -              -        52,164

Stock based compensation                      -            -       284,354            -              -              -       284,354

Accumulated other comprehensive
  income                                      -            -             -            -      6,006,999              -     6,006,999

Net Loss for the year                         -            -             -            -              -     (1,022,463)   (1,022,463)
                                    ------------------------------------------------------------------------------------------------

Balance, May 31, 2005                 5,101,364  $     5,101   $ 1,418,489   $   (4,000)   $ 6,006,999    $(1,660,780)  $ 5,765,809
                                    ================================================================================================
</TABLE>

All per share amounts have been  retroactively  restated to reflect the 1 for 10
reverse common stock split on July 25, 2005.



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

                                      F-5
<PAGE>
                            PATCH INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              MAY 31, 2005 and 2004
                            (Stated in U.S. Dollars)

1.   OPERATIONS AND GOING CONCERN

     a)  Organization and Nature of Operations

         Patch International, Inc. (the "Company") was incorporated in the State
         of  Nevada on June 20,  1997.  Effective  June 15,  2004,  the  Company
         changed its domicile from Utah to Nevada. Effective March 15, 2004, the
         Company  acquired all the issued and outstanding  common stock of Patch
         Energy Inc.  ("Patch"),  a private company involved in the exploration,
         development  and  production  of oil  and  natural  gas.  Prior  to the
         acquisition,  the Company was a non-operating  corporation with nominal
         net assets.  The acquisition is a capital  transaction in substance and
         therefore has been accounted for as a recapitalization  of the Company.
         Accordingly, because Patch is deemed to be the purchaser for accounting
         purposes,  these consolidated  financial  statements are presented as a
         continuation  of Patch and include the results of  operations  of Patch
         since incorporation on February 11, 2002, and the results of operations
         of the Company  since the date of  acquisition  on March 15, 2004.  See
         Note 4.

         These consolidated  financial  statements include the accounts of Patch
         International,  Inc. and its  wholly-owned  subsidiary,  Patch  Energy,
         Inc., which was incorporated in British Columbia, Canada.

     b)  Going Concern

         As of May 31, 2005,  the Company had not reached a level of operations,
         which would finance day-to-day activities. These consolidated financial
         statements  have been prepared on the assumption  that the Company is a
         going   concern,   meaning  it  will  continue  in  operation  for  the
         foreseeable  future  and will be able to realize  assets and  discharge
         liabilities in the ordinary  course of operations.  Different  bases of
         measurement  may be  appropriate  when a  company  is not  expected  to
         continue   operations  for  the  foreseeable   future.   The  Company's
         continuation as a going concern is dependent upon its ability to attain
         profitable  operations and generate funds therefrom and/or raise equity
         capital  or   borrowings   sufficient   to  meet   current  and  future
         obligations.  Management  intends to support the Company by  exercising
         stock options and/or  warrants,  advancing  funds  necessary or raising
         funds  through  private  placements  until the  Company  can  achieve a
         profitable level of operations.

         The Company  incurred losses from operations of $1,022,463 and $534,872
         for the years  ended May 31,  2005 and 2004,  respectively.  At May 31,
         2005 the Company had a working  capital  deficiency of $441,549 (2004 -
         $288,736)  and  has  insufficient  revenues  to  offset  operating  and
         administrative expenses.  These conditions,  among others, give rise to
         substantial  doubt about the  Company's  ability to continue as a going
         concern. These financial statements do not include any adjustments that
         might arise from this uncertainty.

2.   SIGNIFICANT ACCOUNTING POLICIES

     a)  Basis of Presentation

         These   financial   statements  and  related  notes  are  presented  in
         accordance with accounting  principles generally accepted in the United
         States, and are expressed in US dollars.  The Company's fiscal year-end
         is May 31.

     b)  Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect the amounts  reported  in the  financial
         statements and accompanying  disclosures.  Although these estimates are
         based on management's  best knowledge of current events and actions the
         Company may undertake in the future, actual results may differ from the
         estimates.

     c)  Financial Instruments

         The carrying amounts of financial  instruments including cash, accounts
         receivable,   trading   securities,   accounts   payable   and  accrued
         liabilities,  and amounts  due to related  parties,  approximated  fair
         value at May 31, 2005 and 2004.

     d)  Investments

         The Company's available for sale securities are carried at the lower of
         cost or estimated  realizable value. The Company's  trading  securities
         are carried at market value.

                                      F-6

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     a)  Property and Equipment

         Property and equipment  consists of computer  hardware,  is recorded at
         cost and is being amortized using the declining balance method over its
         estimated useful life at the rate of 30% per annum.

     b)  Oil and Gas Interests

         The Company follows the successful efforts method of accounting for its
         oil  and  gas  producing  activities.  Under  this  method,  all  costs
         associated  with  productive   exploratory   wells  and  productive  or
         nonproductive  development  wells  are  capitalized  while the costs of
         nonproductive  exploratory  wells are expensed.  If an exploratory well
         finds oil and gas reserves,  but a determination that such reserves can
         be classified as proved is not made after one year following completion
         of drilling, the costs of drilling are charged to operations.  Indirect
         exploratory expenditures,  including geophysical costs and annual lease
         rentals, are expensed as incurred. Unproved oil and gas properties that
         are individually  significant are periodically  assessed for impairment
         of  value,  and a loss  is  recognized  at the  time of  impairment  by
         providing an impairment  allowance.  Capitalized costs of producing oil
         and gas properties and related  support  equipment,  after  considering
         estimated  dismantlement  and abandonment  costs and estimated  salvage
         values, are depreciated and depleted by the unit-of-production method.

         On the sale or retirement of a complete unit of a proved property,  the
         cost and related accumulated depreciation,  depletion, and amortization
         are eliminated  from the property  accounts,  and the resultant gain or
         loss is  recognized.  On the  retirement  or sale of a partial  unit of
         proved  property,  the  cost is  charged  to  accumulated  deprecation,
         depletion, and amortization with a resulting gain or loss recognized in
         income.  On the sale of an entire interest in an unproved  property for
         cash or cash equivalent, gain or loss on the sale is recognized, taking
         into  consideration  the  amount  of  any  recorded  impairment  if the
         property had been assessed  individually.  If a partial  interest in an
         unproved  property  is  sold,  the  amount  received  is  treated  as a
         reduction of the cost of the interest  retained.  In joint ventured oil
         and gas exploration  and production  activities,  the accounts  reflect
         only the Company's proportionate interest in such activities.

     c)  Asset Retirement Obligations

         The Company  accounts for asset  retirement  obligations  in accordance
         with  the  provisions  of SFAS 143  "ACCOUNTING  FOR  ASSET  RETIREMENT
         OBLIGATIONS". SFAS 143 requires the Company to record the fair value of
         an asset retirement obligation as a liability in the period in which it
         incurs a legal  obligation  associated  with the retirement of tangible
         long-lived  assets  that  result  from the  acquisition,  construction,
         development and/or normal use of the assets.

     e)  Income Taxes

         The Company  uses the  liability  method to account  for income  taxes.
         Under this method,  deferred tax assets and  liabilities are determined
         based on  differences  between  financial  reporting  and tax  bases of
         assets  and  liabilities.  Deferred  tax  assets  and  liabilities  are
         measured  using  enacted tax rates and laws that will be in effect when
         the differences are expected to reverse.

         Deferred tax assets are reduced by a valuation  allowance  when,  based
         upon currently available  information,  it is more likely than not that
         some  portion or all of the  deferred  tax assets will not be realized.
         Deferred  tax assets and  liabilities  are  adjusted for the effects of
         changes in tax laws and rates on the date of enactment.

     f)  Stock Based Compensation

         The Company accounts for stock based employee and director compensation
         arrangements  in accordance  with  provisions of Accounting  Principles
         Board  ("APB")  Opinion  No.  25 -  "ACCOUNTING  FOR  STOCK  ISSUED  TO
         EMPLOYEES",   and  related  interpretations,   and  complies  with  the
         disclosure  provisions  of SFAS No. 123 -  "ACCOUNTING  FOR STOCK BASED
         COMPENSATION".  Under APB No. 25, compensation  expense is based on the
         difference,  if any,  on the date the  number of shares  receivable  is
         determined, between the estimated fair value of the Company's stock and
         the  exercise  price of options to  purchase  that  stock.  Stock based
         compensation  arrangements  for others are recorded at their fair value
         as the services are provided and the compensation earned.



                                      F-7

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     g)  Loss Per Share

         The Company  computes loss per share in accordance  with SFAS No. 128 -
         "EARNINGS PER SHARE".  Under the provisions of SFAS No. 128, basic loss
         per share is computed using the weighted average number of common stock
         outstanding  during the  periods.  Diluted  loss per share is  computed
         using the weighted  average number of common and  potentially  dilutive
         common stock  outstanding  during the period.  As the Company generated
         net losses in each of the periods presented, the basic and diluted loss
         per share is the same as any  exercise of options or warrants  would be
         anti-dilutive.

3.   RECENT PRONOUNCEMENTS

     In May 2005, the Financial  Accounting  Standards  Board (FASB) issued SFAS
     No. 154,  "Accounting  Changes and Error Corrections - A Replacement of APB
     Opinion No. 20 and SFAS No. 3". SFAS 154 changes the  requirements  for the
     accounting  for and  reporting  of a change  in  accounting  principle  and
     applies to all voluntary changes in accounting  principle.  It also applies
     to changes required by an accounting  pronouncement in the unusual instance
     that the  pronouncement  does not include specific  transition  provisions.
     SFAS 154 requires  retrospective  application to prior  periods'  financial
     statements of changes in accounting  principle,  unless it is impracticable
     to determine either the period-specific effects or the cumulative effect of
     the change.  The  provisions of SFAS No. 154 are  effective for  accounting
     changes and  correction  of errors  made in fiscal  years  beginning  after
     December 15, 2005.  The adoption of this standard is not expected to have a
     material  effect  on the  Company's  results  of  operations  or  financial
     position.

     In December 2004,  the FASB issued SFAS No. 153,  "EXCHANGES OF NONMONETARY
     ASSETS - AN  AMENDMENT  OF APB OPINION NO. 29". The guidance in APB Opinion
     No.  29,  "ACCOUNTING  FOR  NONMONETARY  TRANSACTIONS",  is  based  on  the
     principle that exchanges of nonmonetary  assets should be measured based on
     the fair value of the  assets  exchanged.  The  guidance  in that  Opinion,
     however, included certain exceptions to that principle. SFAS No. 153 amends
     Opinion No. 29 to eliminate  the  exception  for  nonmonetary  exchanges of
     similar  productive  assets and  replaces it with a general  exception  for
     exchanges of nonmonetary  assets that do not have commercial  substance.  A
     nonmonetary  exchange has commercial  substance if the future cash flows of
     the  entity  are  expected  to  change  significantly  as a  result  of the
     exchange.  The  provisions of SFAS No. 153 are  effective  for  nonmonetary
     asset exchanges  occurring in fiscal periods beginning after June 15, 2005.
     Early  application  is  permitted  and  companies  must apply the  standard
     prospectively.  The  adoption of this  standard  is not  expected to have a
     material  effect  on the  Company's  results  of  operations  or  financial
     position.

     In December 2004, the Financial  Accounting  Standards  Board (FASB) issued
     Statement of Financial  Accounting  Standard (SFAS) No. 123R,  "Share Based
     Payment".  SFAS  123R  is a  revision  of  SFAS  No.  123  "Accounting  for
     Stock-Based  Compensation",  and supersedes APB Opinion No. 25, "Accounting
     for Stock Issued to  Employees"  and its related  implementation  guidance.
     SFAS 123R  establishes  standards for the  accounting for  transactions  in
     which an entity exchanges its equity instruments for goods or services.  It
     also  addresses  transactions  in which an  entity  incurs  liabilities  in
     exchange  for goods or  services  that are  based on the fair  value of the
     entity's equity instruments or that may be settled by the issuance of those
     equity   instruments.   SFAS  123R  focuses  primarily  on  accounting  for
     transactions  in which an entity obtains  employee  services in share-based
     payment  transactions.  SFAS 123R  requires a public  entity to measure the
     cost of  employee  services  received  in  exchange  for an award of equity
     instruments  based on the grant-date  fair value of the award (with limited
     exceptions).  That cost will be recognized  over the period during which an
     employee  is required  to provide  service in exchange  for the award - the
     requisite  service period (usually the vesting period).  SFAS 123R requires
     that the compensation cost relating to share-based payment  transactions be
     recognized in financial statements. That cost will be measured based on the
     fair value of the equity or liability  instruments issued.  Public entities
     that file as small business  issuers will be required to apply SFAS 123R in
     the first interim or annual reporting period that begins after December 15,
     2005.  The  adoption of this  standard  is not  expected to have a material
     effect on the Company's results of operations or financial position.

     In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 ("SAB
     107") to give guidance on the implementation of SFAS 123R. The Company will
     consider SAB 107 during implementation of SFAS 123R.

     The FASB has also  issued  SFAS  No.  151 and 152,  but they  will not have
     relationship to the operations of the Company.  Therefore a description and
     its impact for each on the Company's operations and financial position have
     not been disclosed.

                                      F-8

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

4.   ACQUISITION OF SUBSIDIARY

     Effective  March 15,  2004,  the  Company  acquired  100% of the issued and
     outstanding  shares of Patch Energy Inc.  ("Patch")  by issuing  18,232,625
     (1,823,262  split-adjusted)  shares of common  stock in a one for ten share
     exchange.  Patch was a private British Columbia corporation involved in the
     exploration, development and production of oil and natural gas.

     A summary of the transaction is as follows:

     The issued  and  outstanding  share  capital  of the  Company  prior to the
     acquisition was 2,063,081 split-adjusted shares of common stock. The issued
     and  outstanding  share  capital  of  Patch  prior to the  acquisition  was
     18,232,625  shares  of  common  stock.  The  transaction  resulted  in  the
     Company's  shareholders  holding  53% of the total  issued and  outstanding
     split-adjusted  common shares, and Patch shareholders having a total of 47%
     of the  total  issued  and  outstanding  split-adjusted  common  shares  of
     3,886,343  after the close of the  acquisition.  The  transaction  has been
     treated as a  recapitalization  of the Company with Patch being  treated as
     the acquirer.  Accordingly the results of operations presented are those of
     Patch since  incorporation on February 11, 2002,  together with the results
     of operations of the Company since March 15, 2004.

     Even though former  shareholders of the Company controlled 53% of the total
     issued and outstanding shares after the acquisition, former shareholders of
     Patch  effectively  controlled  the combined  entity as there were no other
     blocks of share  capital  equal to or greater  than 5% of the total  issued
     capital.  A former  majority  shareholder  of Patch also had the ability to
     elect the majority of the board of the combined  entity,  and management of
     the  combined  entity  comprises  that  one  former  Patch  shareholder  as
     President,  Chief  Executive  Officer  and  Director.  For  these  reasons,
     pursuant  to  paragraph  (7  (b),  (c) and (d) of  Statement  of  Financial
     Accounting  Standards,  No.  141  "Business  Combinations",  Patch has been
     treated as the acquirer corporation.

     The Company had net liabilities of $152,024 at the acquisition date and are
     included in the  consolidated  balance sheet at their  previously  recorded
     amounts.

     The acquisition is summarized as follows:

         Cash                                          $    1,034
         Investment                                             1
         Accounts payable, and accrued liabilities       (115,216)
         Due to related parties                           (37,843)
                                                     -------------
         Net liabilities acquired                      $ (152,024)
                                                     =============

5.   TRADING SECURITIES

<TABLE>
<CAPTION>
                                                                 May 31, 2005      May 31, 2004
                                                                 ------------------------------
<S>                                                              <C>             <C>
         Trading Securities,
         (2004 - 944,450 common shares (market value $28,334))   $           -   $      28,334
                                                                 ==============================
</TABLE>




                                      F-9
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

6.   AVAILABLE-FOR-SALE SECURITIES

     The Company owns  approximately  an 8.6% equity interest in Pharmaxis Ltd.,
     an Australian company listed on the Australian Stock Exchange. These shares
     are  restricted  from trading until  November 11, 2005 and therefore at May
     31, 2004, in accordance with SFAS 115  "ACCOUNTING FOR CERTAIN  INVESTMENTS
     IN DEBT AND EQUITY SECURITIES",  this investment was carried at cost of $1.
     Commencing  from November 11, 2004, the Company  recorded its investment at
     fair value.  At May 31, 2005,  the Company has  recognized a discount  from
     quoted  market  value of  securities  held for resale due to the  following
     factors: lack of marketability of the Company's holdings due to the trading
     restriction  to  November  2005,  the  ability  to dispose of large - block
     holdings in a timely manner,  and the risk associated with an investment in
     a startup company engaged in research and development. At May 31, 2005, the
     discounted  market  value  is  recorded  at  $6,007,000,   net  of  tax  of
     $2,217,751,  resulting  in an  unrealized  gain  of  $6,006,999,  which  is
     recorded  as  other   comprehensive   income,   a  separate   component  of
     shareholders' equity.

<TABLE>
<CAPTION>
                                                                           May 31,           May 31,
                                                                            2005               2004
                                                                      ---------------------------------
                                                                                            (Restated -
                                                                                             Note 16)
<S>                                                                   <C>              <C>
        11,200,000 ordinary shares                                    $   6,007,000    $           1
                                                                      =================================
</TABLE>

7.   OIL AND GAS INTERESTS
<TABLE>
<CAPTION>
                                                                           May 31,          May 31,
                                                                            2005             2004
                                                                      ---------------  ---------------
<S>                                                                   <C>              <C>
        OIL AND GAS INTERESTS - SUCCESSFUL EFFORTS METHOD

        Balance beginning of the year                                 $     130,440    $     109,876
        Expenditures                                                        127,365           78,453
        Depletion                                                           (25,136)         (57,889)
        Dry well and abandoned interests                                    (34,385)               -
                                                                      ---------------  ---------------
        Balance end of the year                                       $     198,284    $     130,440
                                                                      ===============  ===============

        Represented by:

        California, U.S.A.
        Producing interests subject to depletion and amortization     $      15,638    $      15,638
        Accumulated depletion                                               (15,638)         (15,099)
                                                                      ---------------  ---------------
                                                                                  -              539
                                                                      ---------------  ---------------
        Texas, U.S.A.
        Non-producing interests                                                   -            2,816
                                                                      ---------------  ---------------
        Alberta, Canada
        Non-producing interests                                              68,155                -
                                                                      ---------------  ---------------
        Saskatchewan, Canada
        Producing interests subject to depletion and amortization           212,113          184,473
        Accumulated depletion                                               (81,984)         (57,388)
                                                                      ---------------  ---------------
                                                                            130,129          127,085
                                                                      ---------------  ---------------
                                                                      $     198,284    $     130,440
                                                                      ===============  ===============
</TABLE>


                                      F-10

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

7.   OIL AND GAS INTERESTS (CONTINUED)

<TABLE>
<CAPTION>
       CAPITALIZED COSTS RELATING TO OIL AND
       GAS PRODUCING ACTIVITIES

                                                                                       May 31,            May 31,
                                                                                        2005              2004
                                                                                  ---------------    ---------------
<S>                                                                               <C>                 <C>

       Proved oil and gas properties and related equipment - California, U.S.A.   $       15,638      $      15,638
       Proved oil and gas properties and related equipment - Saskatchewan, Canada        212,113            184,472
       Non-producing oil and gas properties - Alberta, Canada                             68,155                  -
       Non-producing oil and gas properties - Texas, U.S.A.                                    -              2,816
                                                                                  ---------------     --------------
       Sub-total                                                                         295,906            202,926
       Accumulated depletion                                                             (97,622)           (72,486)
                                                                                  ---------------     --------------
                                                                                  $      198,284      $     130,440
                                                                                  ===============     ==============

       COSTS INCURRED IN OIL AND GAS ACQUISITION,
       EXPLORATION AND DEVELOPMENT ACTIVITIES
                                                                                       May 31,            May 31,
                                                                                        2005               2004
                                                                                  ---------------     --------------
       Exploration costs - Texas, U.S.A.                                          $       31,569      $       2,816

       Development costs - Alberta, Canada                                                68,155                  -
       Development costs - Saskatchewan, Canada                                           27,641             75,637
                                                                                  ---------------     --------------
                                                                                  $      127,365      $      78,453
                                                                                  ===============     ==============

       RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES -
       TEXAS, U.S.A.
                                                                                       May 31,            May 31,
                                                                                        2005               2004
                                                                                  ---------------     --------------
       Impairment of oil costs                                                    $      (34,385)     $           -
                                                                                  ---------------     --------------
       Net loss from producing activities                                         $      (34,385)     $           -
                                                                                  ===============     ==============

       RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES -
       CALIFORNIA, U.S.A.
                                                                                       May 31,            May 31,
                                                                                        2005               2004
                                                                                  ---------------     --------------
       Oil and gas sales                                                          $          213      $      16,792
       Production costs                                                                     (356)            (7,956)
       Depletion                                                                            (540)            (3,600)
                                                                                  ---------------     --------------
       Net (loss) income from producing activities                                $         (683)     $       5,236
                                                                                  ===============     ==============

       RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES -
       SASKATCHEWAN, CANADA
                                                                                       May 31,            May 31,
                                                                                        2005               2004
                                                                                  ---------------     --------------
       Oil and gas sales                                                          $       97,202      $      98,671
       Production costs                                                                  (25,224)           (42,817)
       Depletion                                                                         (24,596)           (54,289)
       Dry well costs                                                                     (1,324)           (57,604)
                                                                                  ---------------     --------------
       Net income (loss) from producing activities                                $       46,058      $    (56,039)
                                                                                  ===============     ==============
</TABLE>
                                      F-11

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

7.   OIL AND GAS PROPERTIES (CONTINUED)

     a)  Saskatchewan, Canada


         On May 1, 2002,  the Company  acquired a 12.5% working  interest in ten
         test wells located in Saskatchewan  by incurring  15.625% of the costs.
         The Company  entered  into a  participation  agreement  with  Fairchild
         International Corporation ("Fairchild") whereby Fairchild will earn one
         third of the Company's  interest in the ten test wells by incurring one
         third of the associated  costs.  The Company agreed to participate in a
         second set of nine test wells in Saskatchewan,  Canada,  by agreeing to
         incur 15.625% of the costs to earn a 12.5% working interest.  Fairchild
         will also earn the right to earn  1.75% of the  Company's  interest  by
         incurring  2.5% of the  associated  costs.  The Company  entered into a
         participation agreement dated November 5, 2003 with Fairchild where the
         Company  granted to Fairchild a 6.75% interest in any subsequent  wells
         to be drilled on the Farmout Lands pursuant to a Farmout Agreement,  as
         detailed  above,  in  consideration  of incurring  8.4375% of the costs
         associated with any such subsequent wells. During the period, Fairchild
         relinquished its interest in all the above wells back to the Company.

         The Company entered into a  participation  agreement with Micron Enviro
         Systems  Inc.  ("Micron")  dated March 27, 2003 where Micron can earn a
         3.5%  working  interest by incurring 5% of the  associated  costs.  The
         Company  also  entered  into  a  participation  agreement  with  Butler
         Development  Corporation  ("Butler")  dated April 28, 2003 where Butler
         can earn a 3.5%  working  interest by  incurring  5% of the  associated
         costs and by paying the Company CAD$15,000 (received).

         On November 14, 2003, the Company  acquired a 12.5% working interest in
         a test well  located in  Saskatchewan  and 6.25% in the  balance of the
         Farmout Lands,  by incurring 12.5% of the costs. A total of $1,324 (May
         31, 2004  -$57,604)  in costs  related to this well has been charged to
         operations,  as the well  was  shut-in.

     b)  Alberta,  Canada

         (a)    By a Participation  Agreement  dated March 10, 2005, the Company
                acquired a 25% working  interest in the Bear Canyon gas project.
                From the date of the  Participation  Agreement  to May 31, 2005,
                the  Company  did  not  incur  any  expenses  on  this  project.
                Subsequently,  the well was drilled and shut-in.

         (b)    On May 30, 2005, the  Company acquired a 10% working interest in
                a test  well  (the  "McLeod"  project)  located  in  Alberta  by
                incurring  10% of the costs.  As at May 31,  2005,  the  Company
                incurred  $68,155  towards  the  drilling  costs.  The  well was
                drilled in June, 2005 and is awaiting completion.

     c)  California, USA

         The  Company has 0.75 of 1% of an interest in four test wells in Tehama
         County, California. The Company relinquished its interest in these test
         wells in fiscal 2005.

     d)  Texas, USA

         The Company entered into a participation  agreement dated September 30,
         2003 with PB Energy USA Inc. ("PB"),  where the Company was granted the
         right  to earn a 3.75%  working  interest  in a Test  Well  and a 3.75%
         working  interest in 3 tracts of land  totalling 856 acres lying within
         the Goliad  County of Texas,  USA (the  "Program  Lands")  known as the
         Manahuilla  Creek  Project,  by paying 5% of the  Prospect  Acquisition
         Costs (being  US$15,000  (paid)),  5% of the Test Well  Operations  and
         3.75% of the costs of Development  of Program Lands.  The test well has
         been shut-in.

     e)  Ukraine

         The Company  signed a  Memorandum  of  Understanding  with Firma HAS to
         drill several wells in the oil and gas fields of Chernigivska,  Sumska,
         Poltavaska and  Kharkivska  regions of Ukraine which have been approved
         by the Ukrainian government. No costs have been incurred to date.

     f)  Tunisia, North Africa

         The Company  signed a Memorandum  of  Understanding  with  Carthago Oil
         Company,  Tunisia,  for  the  right  to  acquire  40% of an oil and gas
         interest in Northern Tunisia by committing  approximately $4,000,000 to
         fund a work program which  includes the drilling of one well. The terms
         of the Memorandum expired on April 30, 2005.

                                      F-12

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

8.   DUE TO RELATED PARTIES

     a)  Related  parties  include  directors  and officers and  companies  with
         common  management  and  directorships.   Related  party  accounts  are
         unsecured  with no fixed  terms of interest  or  repayment.  At May 31,
         2005,  amounts owing of $342,813  (2004 - $250,388) were due to related
         parties.

     b)  Effective  February 11, 2003,  the Company  entered into two management
         services agreements with directors and officers. The payments due under
         these  agreements  are $85,000  per annum for 2 years.  During the year
         ended  May 31,  2005,  $55,000  in  management  fees  were  charged  to
         operations (2004 - $60,000).

     c)  The Company  entered  into  management  agreements  for  administration
         fees  aggregating  $6,500 per month  commencing  December  31,  2002 to
         November 30, 2005 with directors and officers.  An agreement  which had
         required payments of $2,500 per month was terminated effective December
         31, 2003. On May 1, 2005, the Company entered into a revised  agreement
         superseding  the remaining  agreement.  The revised  agreement is for a
         term of 5 years with  payments of $175,000  per annum.  During the year
         ending May 31,  2005,  the Company  paid,  $60,239  (2004 - $12,000) in
         related party administration fees.

9.   COMMON STOCK

     Effective July 25, 2005, the Company  effected a reverse stock split on the
     basis of the issue of one new common share for the  cancellation  of 10 old
     common shares. All share amounts have been  retroactively  adjusted for all
     periods presented.

     Share purchase warrants are outstanding to purchase 89,563 shares of common
     stock at a price of $1.20 per share on or before January 6, 2006.


     The Company is proposing the distribution of a dividend on a pro rata basis
     of a total of 5,600,000 of the shares,  or the proceeds,  of its investment
     in Pharmaxis Ltd.  ("Pharmaxis"),  on or after November 11, 2005, being the
     date that the escrow  restrictions  attaching  to such shares  expire.  For
     every 0.7239 shares of Patch, one share of Pharmaxis or its cash equivalent
     will be distributed.  The directors of the Company have fixed July 30, 2004
     as the record date for determining  shareholders entitled to participate in
     such  distribution.  The record date is subject to  receiving  all required
     regulatory approvals and fulfilling all necessary statutory requirements in
     order to permit the distribution to occur.


     During the year ended May 31, 2005,  the Company  issued  52,164  shares of
     common stock at $1.00 per share in extinguishment of debt totaling $52,164,
     and  issued  188,557  shares  of  common  stock  pursuant  to stock  option
     exercises in extinguishment of debt totaling $125,240.


     A summary of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>
                                                May 31, 2005                               May 31, 2004
                                        ------------------------------     --------------------------------
                                                             Weighted                             Weighted
                                                  Number      Average                Number        Average
                                                      of     Exercise                    of       Exercise
                                                 Options        Price               Options          Price
                                        ------------------------------     --------------------------------
<S>                                           <C>               <C>                <C>               <C>
       Balance, beginning of period              440,500        $1.20               153,000          $1.00
       Granted                                 1,227,857        $0.60               450,000          $1.20
       Cancelled                                (100,000)       $1.30                     -              -
       Exercised                              (1,020,357)       $0.60              (162,500)         $1.10
                                        ------------------------------     --------------------------------
       Balance, end of period                    548,000        $0.70               440,500          $1.20
                                        ==============================     ================================
</TABLE>

     During the year ended May 31, 2005,  137,500  stock  options were  repriced
     from $1.65 to $0.70 per share.

     As at May 31, 2005, the following options are outstanding:

<TABLE>
<CAPTION>
                                          OUTSTANDING                                    EXERCISABLE
                       --------------------------------------------------    ------------------------------------
                                               Weighted                                                 Weighted
                                                Average         Weighted                                 Average
                              Number          Remaining          Average               Number           Exercise
             Exercise             of        Contractual         Exercise                   of              Price
                Price         Shares       Life (years)            Price               Shares           Weighted
     -------------------------------------------------------------------     ------------------------------------
<S>                          <C>                   <C>             <C>                <C>                  <C>
     $    0.55 - 1.00        548,000               2.85            $0.70              548,000              $0.70
                       --------------------------------------------------    ------------------------------------
                             548,000               2.85            $0.70              548,000              $0.70
                       ==================================================    ====================================
</TABLE>

                                      F-13

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)


9.   COMMON STOCK (CONTINUED)

     The Company  accounts for stock based  employee  and director  compensation
     arrangements in accordance with provisions of Accounting  Principles  Board
     ("APB")  Opinion No. 25 - "ACCOUNTING  FOR STOCK ISSUED TO EMPLOYEES",  and
     related  interpretations,  and complies with the  disclosure  provisions of
     SFAS No. 123 - "ACCOUNTING FOR STOCK BASED COMPENSATION". Under APB No. 25,
     compensation  expense is based on the  difference,  if any, on the date the
     number of shares receivable is determined, between the estimated fair value
     of the Company's  stock and the exercise  price of options to purchase that
     stock.  Stock based  compensation  arrangements  for others are recorded at
     their fair value as the services are provided and the compensation  earned.
     During  the  year  ended  May  31,  2005,   stock-based   compensation  for
     consultants  amounting to $284,354 was recorded on 1,152,857 stock options;
     662,857  stock  options  priced at $0.70 per share,  30,000  stock  options
     priced  at  $0.56,  100,000  stock  options  priced  at $0.55 per share and
     360,000  stock  options at $0.45 per share.  Also during the year ended May
     31,  2005,  a director  and an officer of the  Company  received a total of
     75,000 stock options priced at $0.70 per share for consulting services.

     Had compensation cost been recognized on the basis of fair value,  pursuant
     to SFAS No. 123, net loss and loss per share would have been as follows:

<TABLE>
<CAPTION>
                                                                                         May 31,          May 31,
                                                                                            2005             2004
<S>                                                                                <C>               <C>
          Net Loss - as reported                                                   $  (1,022,463)    $   (534,872)
            Add: Stock-based compensation expense included in net loss - as
            reported                                                                     284,354          203,400
            Deduct: Stock-based compensation expense determined under fair value
            method                                                                      (327,444)        (203,400)
                                                                                   --------------------------------

          Net Loss - Pro-Forma                                                     $  (1,065,553)    $   (534,872)
                                                                                   ================================

          Basic and diluted net loss per share - as reported                            $  (0.23)         $ (0.24)
                                                                                   --------------------------------

          Basic and diluted net loss per share - Pro-Forma                              $  (0.24)         $ (0.24)
                                                                                   ================================
</TABLE>

     The fair value of each  option  granted  during the year ended May 31, 2005
     was estimated  using the  Black-Scholes  option  pricing  model  assuming a
     dividend  yield of 0.0%,  expected  volatility of 216%,  risk free interest
     rate of 2.4%, and weighted average expected option terms of .73 years.

     The fair value of each  option  granted  during the year ended May 31, 2004
     was estimated  using the  Black-Scholes  option  pricing  model  assuming a
     dividend  yield of 0.0%,  expected  volatility of 264%,  risk free interest
     rate of 1.8%, and weighted average expected option terms of 1.75 years.

10.  ACCUMULATED OTHER COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                        May 31,          May 31,
                                                                           2005             2004
<S>                                                                <C>               <C>
         Net Loss for the year                                     $ (1,022,463)     $  (534,872)

         Unrealized holding gain arising during the year              6,006,999                -
                                                                   ------------------------------
         Comprehensive gain (loss) for the year                    $  4,984,536      $  (534,872)
                                                                   ==============================
</TABLE>

11.  COMMITMENTS

     a)  The  Company  entered into  a letter  of intent  with Mr. Danilo Mancin
         ("Mancin") to jointly pursue  commercial  opportunities  in Algeria and
         Libya. As consideration  for Mancin's  services,  the Company agreed to
         pay $3,000 per month up to the earlier of March 31, 2005 or the date on
         which a  commercial  transaction  is entered  into subject to specified
         terms as described in the service agreement, and issue stock options to
         acquire  40,000  common  shares of the Company at an exercise  price of
         $0.70 per share for a term of 5 years. The Company also agreed to issue
         250,000  common  shares upon  execution of the first  agreement,  and a
         further 250,000 common shares upon completion of the first transaction.
         During the year ended May 31, 2005,  Mancin received options to acquire
         40,000 common shares,  however no agreement was reached  between Mancin
         and the Company and is no longer being pursued.

                                      F-14

<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)

11.  COMMITMENTS (CONTINUED)

     b)  On  May 1, 2005,  the Company entered into a consulting agreement for a
         term of 5 years with payments of $75,000 per annum.

12.  SUBSEQUENT EVENTS

     a)  The  Company  received  $137,750  upon  the  exercise  of 200,000 stock
         options at  various  prices  ranging  from $0.55 per share to $0.70 per
         share of common stock.

     b)  The Company is proposing a private  placement  offering  consisting  of
         $1,500,000  convertible  debentures,  convertible into units. Each unit
         will be convertible  into one share of common stock at $0.10 per share.
         The debenture will have a one year term,  bearing interest at 14.5% per
         annum.

13.  INCOME TAX

     The Company provides deferred income taxes for differences  between the tax
     reporting   basis  and  the  financial   reporting   basis  of  assets  and
     liabilities.   The  Company   follows  the  provisions  of  SFAS  No.  109,
     "ACCOUNTING FOR INCOME TAXES". Pursuant to SFAS 109 the Company is required
     to compute tax asset benefits for net operating losses carried forward. The
     potential  benefit of net U.S.  operating losses has not been recognized in
     the financial  statements  because the Company cannot be assured that it is
     more likely than not that it will  utilize  the net U.S.  operating  losses
     carried  forward in future  years.  At May 31,  2005,  the  Company had net
     operating losses for U.S. federal income tax purposes of $2,342,000,  which
     begin expiring in fiscal 2024, and had non-capital loss  carryforwards  for
     Canadian  income tax purposes of $510,000,  which begin  expiring in fiscal
     2011. When the future  utilization of some portion of the  carryforwards is
     determined  not to be "more  likely  than not," a  valuation  allowance  is
     provided to reduce the recorded tax benefits  from such assets.  At May 31,
     2005, a valuation  allowance of $1,011,000 was provided to reduce  deferred
     tax assets to nil.

     Income tax expense was as follows:

                                                    May 31,            May 31,
                                                     2005               2004
                                                       $                  $

         Current
            Canadian                                     -                   -
            United States                                -                   -

         Deferred:
            Canadian                                     -                   -
            United States                                -                   -
         -----------------------------------------------------------------------

         Total income tax expense                        -                   -
         =======================================================================



     A reconciliation  of the statutory federal income tax rate to the Company's
     effective tax rate follows:

                                                      Canada       United States

         Statutory federal income tax rate              38%             35%
         Change in valuation allowance                 (38%)           (35%)
         -----------------------------------------------------------------------
         Total income tax expense                        -               -
         =======================================================================


     The deferred tax liabilities and assets were as follows:

                                                    May 31,         May 31,
                                                     2005            2004
                                                       $               $

         Deferred tax assets
         - Net operating loss carryforwards       (1,011,000)       (737,000)
         - Less valuation allowance                1,011,000         737,000
         -----------------------------------------------------------------------
         Net deferred tax assets                           -               -
         =======================================================================


                                      F-15
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)


14.  GEOGRAPHIC AND SEGMENTED INFORMATION

     The  Company  has  one  reportable   segment  consisting  of  oil  and  gas
     operations,  except for the Company's investment in Pharmaxis.  The Company
     derives revenues from the oil and gas operations from the sale of petroleum
     products. The Company's operations are in Canada and the United States.

     GEOGRAPHIC:

                                                      May 31,         May 31,
        Long-lived assets:                             2005            2004
                                                  -------------   --------------
                                                                    (Restated -
                                                                      Note 16)

        United States                             $          -    $       3,355
        Canada                                         200,358          127,085
        Australia                                    6,007,000                1
                                                  -------------   --------------
        Total long-lived assets                   $  6,207,358    $     130,441
                                                  =============   ==============


                                                     May 31,           May 31,
        Revenues from external customers:              2005             2004
                                                  -------------   --------------
        United States                             $        213    $      16,792
        Canada                                          97,202           98,671
                                                  -------------   --------------
        Total revenues from external customers    $     97,415    $     115,463
                                                  =============   ==============

15.  SCHEDULE OF SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS

     RESERVE QUANTITY INFORMATION (UNAUDITED)

     The estimated  quantities  of proved oil and gas reserves  disclosed in the
     table  below  are  based  upon  estimates   prepared  for  the  Company  by
     independent  petroleum  engineers.  Such estimates are inherently imprecise
     and may be subject to substantial revisions. The Company bears the ultimate
     responsibility for proved reserves estimates.

     Revisions may occur because current prices of oil and gas and current costs
     of operating are subject to  fluctuations.  Past  performance of wells does
     not  necessarily  guarantee  future  performance and rates used to estimate
     decline of reserves could vary from that which is projected.











                                      F-16
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)



15.  SCHEDULE OF SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS (CONTINUED)

     All  quantities  shown in the table are  proved  reserves  and are  located
     within the United States and Canada.

        STANDARDIZED MEASURE OF DISCOUNTED FUTURE
        NET CASH FLOWS RELATING TO PROVED OIL
        AND GAS RESERVES (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                      May 31,           May 31,
                                                                                       2005              2004
                                                                                  ---------------   ---------------
                                                                                        GAS               GAS
                                                                                       (mcf)             (mcf)
<S>                                                                               <C>               <C>
        Proved, developed and undeveloped reserves (United States)

        Balance beginning of the year                                                    136,000           290,000
        Production                                                                             -          (154,000)
        Sales of minerals in place                                                      (136,000)                -
                                                                                  ---------------   ---------------
        Balance end of the year                                                                -           136,000
                                                                                  ===============   ===============

        Standardized Measure of Discounted Future Net Cash Flows (United States)

        Future cash flows                                                         $            -    $       19,000
        Future operating expenses                                                              -            (5,000)
                                                                                  ---------------   ---------------
                                                                                               -            14,000
        10% annual discount for estimated timing of cash flows                                 -            (1,000)
                                                                                  ---------------   ---------------
        Standardized measure of discounted future net cash flows                  $            -    $       13,000
                                                                                  ===============   ===============

                                                                                       OIL                OIL
                                                                                      (bbls)            (bbls)
        Proved, developed and undeveloped reserves (Canada)
        Balance beginning of the year                                                     12,000            10,000
        Discoveries                                                                            -             6,000
        Revision to estimates                                                              2,000                 -
        Production                                                                        (3,000)           (4,000)
                                                                                  ---------------   ---------------
        Balance end of the year                                                           11,000            12,000
                                                                                  ===============   ===============

        Standardized Measure of Discounted Future Net Cash Flows (Canada)
        Future cash flows                                                         $      523,000    $      323,000
        Future operating expenses                                                       (229,000)         (216,000)
                                                                                  ---------------   ---------------
                                                                                         294,000           107,000
        10% annual discount for estimated timing of cash flows                           (60,000)           (6,000)
                                                                                  ---------------   ---------------
        Standardized measure of discounted future net cash flows                  $      234,000    $      101,000
                                                                                  ===============   ===============
</TABLE>


                                      F-17
<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)



15.  SCHEDULE OF SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS (CONTINUED)

     RESERVE QUANTITY INFORMATION (UNAUDITED)

     Future  cash flows are  computed by  applying  fiscal  period end prices of
     natural gas and oil to period end  quantities of proved natural gas and oil
     reserves.  Future  operating  expenses and  development  costs are computed
     primarily  by  the  Company's   petroleum   engineers  by  estimating   the
     expenditures  to be incurred in  developing  and  producing  the  Company's
     proved  natural gas and oil  reserves  at the end of the  period,  based on
     period end costs and assuming continuation of existing economic conditions.

     Future income taxes are based on period end statutory  rates,  adjusted for
     tax basis and applicable tax credits.  A discount factor of ten percent was
     used to  reflect  the  timing of future net cash  flows.  The  standardized
     measure of  discounted  future net cash flows is not  intended to represent
     the  replacement  cost of fair value of the  Company's  natural gas and oil
     properties.  An estimate of fair value would also take into account,  among
     other things, the recovery of reserves not presently  classified as proved,
     anticipated  future changes in prices and costs, and a discount factor more
     representative of the time value of money and the risks inherent in reserve
     estimate of natural gas and oil producing operations.

16.  RESTATEMENT

     The Company's  investment in Pharmaxis Ltd. had previously been recorded at
     fair value. The shares are restricted from trading until November 10, 2005.
     The Company has restated the  financial  statements  for the year ended May
     31, 2004, to record the investment at cost.  The previously  reported total
     assets have been reduced by $1,574,999, additional paid-in capital has been
     reduced by $1,622,999 and comprehensive loss has been increased by $48,000.
     The adjustment to additional  paid-in  capital arises from the reduction in
     the value of the investment acquired in the reverse takeover referred to in
     Note 4, from $1,623,000 to $1.

                                                          May 31,
<TABLE>
<CAPTION>
                                                            2004                             May 31,
                                                       (As Originally                          2004
                                                         Reported)        Adjustment        (Restated)
                                                             $                 $                $
<S>                                                      <C>              <C>                  <C>

         Investment                                      1,575,000        (1,574,999)                1

         Additional paid-in capital                      2,062,733        (1,622,999)          439,734

         Accumulated other comprehensive income            (48,000)           48,000                -

</TABLE>

17.  RESTATED QUARTERLY INFORMATION (UNAUDITED)

     As a result of the  restatement  referred  to in Note 16, the  Company  has
     restated the unaudited  financial  statements  for all quarters  commencing
     November 30, 2003 to August 31, 2004.  For the quarter  ended  November 30,
     2003, the previously reported total assets has been reduced by $754,999 and
     comprehensive  income has been reduced by $754,999.  For the quarter  ended
     February 29, 2004, the previously reported total assets has been reduced by
     $1,582,999 and comprehensive income has been reduced by $1,582,999. For the
     quarter ended August 31, 2004,  the  previously  reported  total assets has
     been reduced by $2,432,999,  additional paid-in capital has been reduced by
     $1,622,999 and comprehensive  income has been reduced by $810,000.  For the
     quarter ended November 30, 2004, as the restriction is less than a one-year
     period, the investment is classified as  available-for-sale  securities and
     an adjustment to accumulated  comprehensive  income and additional  paid-in
     capital has been made in the amount of $1,622,999.

     The following is a summary of the unaudited restated balance sheets for the
     quarters  ended November 30, 2003,  February 29, 2004,  August 31, 2004 and
     November 30, 2004:




                                      F-18


<PAGE>
PATCH INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2005
(Stated in U.S. Dollars)


17.  RESTATED QUARTERLY INFORMATION (UNAUDITED) (CONTINUED)

<TABLE>
                            PATCH INTERNATIONAL INC.
                             RESTATED BALANCE SHEETS
<CAPTION>
                                                     November 30,    August 31,    February 29,   November 30,
                                                         2004           2004           2004           2003
                                                     (unaudited)     (unaudited)   (unaudited)     (unaudited)
----------------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>            <C>             <C>
ASSETS

CURRENT
  Cash                                               $     12,491    $     1,774    $     1,034     $     1,136
  Accounts receivable                                      14,994         27,688              -               -
  Trading securities                                            -         11,351              -               -
  Prepaid expenses                                          2,805         72,952              -               -
----------------------------------------------------------------------------------------------------------------

                                                           30,290        113,765          1,034           1,136
PROPERTY AND EQUIPMENT                                      2,463              -              -               -
OIL AND GAS INTERESTS (SUCCESSFUL EFFORTS METHOD)         113,459        123,270              -               -
INVESTMENT                                                      -              1              1               1
AVAILABLE-FOR-SALE SECURITIES                           3,854,000              -              -               -
----------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                         $  4,000,212    $   237,036    $     1,035     $     1,137
================================================================================================================

LIABILITIES

CURRENT
  Accounts payable and accrued liabilities           $    169,843    $   167,359    $   115,216     $    99,921
  Due to related parties                                  298,649        296,450         61,135          45,293
----------------------------------------------------------------------------------------------------------------
                                                          468,492        463,809        176,351         145,214
----------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (DEFICIT)

PREFERRED STOCK:
  Authorized: 1,000,000 preferred shares with par
  value of $0.001
  Issued and outstanding: nil                                   -              -              -               -

COMMON STOCK:
  Authorized: 100,000,000 common shares with par
  value of $0.001
  Issued and outstanding:
    November 30, 2004 - 45,088,641 shares
    August 31, 2004 - 42,385,071 shares
    February 29, 2004 - 19,991,747 shares
    November 30, 2003 - 19,991,747 shares                  45,089         42,385         19,990          19,990
ADDITIONAL PAID-IN CAPITAL                                933,746        635,425      1,582,534       1,582,534
STOCK SUBSCRIPTIONS RECEIVABLE                           (133,000)      (114,375)             -               -
ACCUMULATED OTHER COMPREHENSIVE INCOME                  3,853,999              -              -               -
DEFICIT                                                (1,168,114)      (790,208)    (1,777,840)     (1,746,601)
----------------------------------------------------------------------------------------------------------------

                                                        3,531,720       (226,773)      (175,316)       (144,077)
----------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  (DEFICIT)                                          $  4,000,212    $   237,036    $     1,035     $     1,137
================================================================================================================
</TABLE>



                                      F-19