SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

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

             FOR THE TRANSITION PERIOD FROM MARCH 31, 1999 TO DECEMBER 31, 1999

                         Commission file number: 0-26321

                           SAN JOAQUIN RESOURCES INC.
                 (Name of small business issuer in its charter)

                    NEVADA                            98-0204105
         (State or other jurisdiction of           (I.R.S. Employer
         incorporation or organization)           Identification No.)

            53 STRATFORD PLACE, S.W., CALGARY, ALBERTA T3H 1H7 CANADA
               (Address of principal executive offices)  (Zip Code)

          Issuer's telephone number, including area code: (403)242-9703

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

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

                         COMMON STOCK, $0.0001 PAR VALUE

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 the filing requirements for the past 90 days. Yes _X_ No ___

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

            Issuer's revenues for its most recent fiscal year. $5,784

               Aggregate market value of the voting stock held by
            non-affiliates of the registrant as of March 31, 2000: $0

  Number of shares outstanding of registrant's Common Stock, $0.0001 par value,
                        as of March 31, 2000: 11,769,000

                    Documents incorporated by reference: NONE

       Transitional Small Business Disclosure Format (check one): Yes ___ No _X_


Exhibit index on consecutive page 27                         Page 1 of 131 Pages

<PAGE>



                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS.

San Joaquin  Resources Inc. (the  "Company") was  incorporated on April 21, 1997
under the laws of the State of Nevada as "LEK International, Inc."

The Company operated as a "shell" company until December 31, 1999, when a change
in control  of the  Company  occurred,  in  conjunction  with  closing  under an
Agreement and Plan of  Reorganization.  Prior to closing under the Agreement and
Plan of  Reorganization,  the Company had a total of 3,700,000 shares issued and
outstanding.

The Company issued  8,069,000  shares of its common stock in exchange for all of
the issued and outstanding  common stock of San Joaquin Oil & Gas Ltd., a Nevada
corporation ("San Joaquin"). As a result of that transaction, San Joaquin became
a wholly-owned subsidiary of the Company.

Upon consummation of these  transactions,  the Company had 11,769,000 issued and
outstanding  shares of common stock, of which 8,069,000 shares, or approximately
68.56%,  were owned by persons who were previously  shareholders of San Joaquin.
Persons  who  were  previously  shareholders  of the  Company  owned a total  of
3,700,000  shares or approximately  31.44% of the issued and outstanding  common
stock.

Prior to closing,  shareholders  of the  Company  adopted  Restated  and Amended
Articles of  Incorporation  to be effective  as of January 17,  2000.  Among the
amendments  was a change in the name of the  Company to "San  Joaquin  Resources
Inc."

In  conjunction  with the change in ownership of a  controlling  interest in the
stock of the registrant,  the previous  officers and directors of the registrant
resigned and appointed as new directors J. Timothy Bowes, Nick DeMare, and Colin
S. McNeil.  The new directors elected J. Timothy Bowes as the President and Nick
DeMare as Secretary and Treasurer of the Company.

BUSINESS OF SAN JOAQUIN

San  Joaquin  was  incorporated  in Nevada on  September  14,  1999,  to acquire
interests in petroleum and natural gas leases in the San Joaquin and  Sacramento
Basins of California.  San Joaquin  completed  private  placements of its common
stock in 1999,  selling a total of  1,920,000  shares of common  stock for gross
proceeds of $960,000 and 61,490 Series A Preferred  Shares for gross proceeds of
$30,745.  The  Series  A  Preferred  Shares  were  subsequently  converted  into
6,149,000 shares of common stock.

AGREEMENTS

i)       On September  20,  1999,  the Company  entered  into an agreement  (the
         "Consulting and Overriding  Royalty  Agreement")  covering  exploration
         activity  principally in the San Joaquin Basin and, to a lesser extent,
         in the Sacramento Basin, located in southern California. The Consulting
         and  Overriding  Royalty  Agreement had an initial term of four months,
         and renews  automatically  for four month  periods.  The Consulting and
         Overriding Royalty Agreement may be terminated by giving notice 45 days
         prior  to  the  end  of any  four  month  period.  The  Consulting  and
         Overriding  Royalty  Agreement  provides for the Company  retaining the
         consulting services of Jay S. Davis and Thomas L. Namson  (collectively
         "Davis & Namson")  pursuant to a set fee structure in order to generate
         petroleum  and  natural gas  prospects.  As part of the  retainer,  the
         Company  agreed to  compensate  Davis & Namson for a minimum of 120 man
         days  during  the  initial  four month  term of the  agreement,  at the
         following  rates:  $750/day  for  Partners,   $275/day  for  Geological
         Technicians and $750/day for the Travel Day Rate for Partners.


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<PAGE>



         The  Company  has also  agreed  to  compensate  Davis & Namson  for its
         reasonable  expenses  incurred in connection  with the  performance  of
         services.  For each prospect  Davis & Namson  generates the Company has
         the right to accept or reject the  prospect.  With respect to prospects
         the Company  accepts,  any petroleum and natural gas leases acquired by
         the  Company,  within the  boundary of the  prospect,  are subject to a
         royalty  to Davis &  Namson,  the  amount  of which  is  determined  in
         accordance with the Consulting and Overriding Royalty Agreement, but is
         substantially as follows:


                        ROYALTY PERCENTAGE          IF THE NET REVENUE
                                                       INTEREST IS:

                              3.0%               Greater than 87.5%
                              2.5%               84% to 87.5% inclusive
                              2.0%               81% to 83.99% inclusive
                              1.5%               Less than 81%

         To date the Company has accepted the following  prospects  from Davis &
         Namson:

                  Willow Springs
                  Crocker Canyon
                  Bitterwater Creek
                  Midway Peak

         Davis & Namson is not affiliated with the Company.

         Should  the  Company  reject a  prospect  Davis & Namson has the right,
         after four  months,  to locate a third party to acquire  the  prospect.
         During  this four  month  period  the  Company  can elect to accept the
         prospect and fund the  acquisition of petroleum and natural gas leases.
         The Company  still has the right for seven months  after the  aforesaid
         four months to acquire a 50% interest in the prospect.  As of April 10,
         2000,  the Company had not rejected any prospects  presented by Davis &
         Namson.

ii)      On December 1, 1999, the Company and Canyon Oil ("Canyon") entered into
         an agreement  whereby the Company paid an initial $70,000 to Canyon for
         technical  information  provided  by Canyon on  certain  petroleum  and
         natural gas  properties  (the "Canyon  Properties")  located in the San
         Joaquin and  Sacramento  Basins.  The Company is also required to pay a
         renewal  payment of $70,000 every four months until  termination of the
         agreement.  A payment of $70,000 was due on April 1, 2000.  To date the
         Company has not made this payment and is attempting to renegotiate  the
         terms.  Canyon will retain a 14% carried working interest in any of the
         Canyon Properties which are acquired by the Company.

         Canyon is a limited liability company incorporated in California and is
         not affiliated with the Company.

         As of April 10, 2000, the Company had not acquired any properties  from
         Canyon.

iii)     On November 16, 1999, the Company and Consolidated  Earth Stewards Inc.
         ("CEW")  entered  into a joint  venture  agreement  whereby the Company
         agreed to grant CEW a right of first refusal  ("ROFR") until October 1,
         2001, to participate in a 19% working interest in certain petroleum and
         natural gas  prospects to be  identified,  acquired or generated by the
         Company in the San Joaquin and  Sacramento  Basins.  Under the terms of
         the joint venture  agreement CEW had agreed to pay any initial $150,000
         for the ROFR and  provide an initial  advance of $200,000 to fund CEW's
         share of costs.  On November 23, 1999, CEW paid $70,000 to the Company.
         On  February 8, 2000,  the  Company  and CEW amended the joint  venture
         agreement whereby CEW paid the Company a further $8,000 and the Company
         and CEW agreed to suspend the joint  venture  agreement and any further
         obligations of CEW, pending a review of developments in the San Joaquin
         and Sacramento Basins.


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<PAGE>



         CEW is a public company trading on the Canadian Venture  Exchange.  CEW
         is not affiliated with the Company.

INVESTMENT IN HILTON LLC

A portion  of the  proceeds  from San  Joaquin's  private  offering  was used to
acquire four membership  interests in Hilton Petroleum Greater San Joaquin Basin
Joint Venture LLC ("Hilton LLC"), a Colorado limited liability  company,  for an
initial  investment of $390,000.  As of December 31, 1999, the Company owned 20%
of the Hilton LLC's membership  interests.  The Company has subsequently elected
not to fund any further capital contributions for Hilton LLC and expects to have
its interest in Hilton LLC  converted to shares of Hilton  Petroleum  Ltd.,  the
manager  of  Hilton  LLC,  pursuant  to the  terms  of  Hilton  LLC's  operating
agreement.  See "Item 2.  Description of Property - Other Assets." The remainder
of the  proceeds  from  the  private  placements  will be used to  generate  new
prospects for San Joaquin and to fund working capital.

Mr. Nick DeMare, an officer and director of the Company and San Joaquin, is also
a director of Hilton  Petroleum  Ltd., the manager of Hilton LLC. The terms upon
which San Joaquin acquired its membership  interests in Hilton LLC were the same
as those offered to non-affiliated purchasers.

ACQUISITION, EXPLORATION AND DEVELOPMENT EXPENSES

During the fiscal year ended December 31, 1999, the Company incurred $122,590 in
costs in identifying potential  acquisitions of petroleum and natural gas leases
and paid $390,000 for its initial capital  contribution  for its four membership
interests in Hilton LLC. The Company had also entered into an agreement  whereby
it paid  $70,000,  to a party at  arm's-length,  for  technical  information  on
certain  petroleum  and  natural gas  properties  located in the San Joaquin and
Sacramento Basins.  This payment was offset by a $70,000 payment received by the
Company by its granting of a right of first refusal, to a party at arm's length,
on properties  to be acquired in the San Joaquin and  Sacramento  Basins.  As at
December  31,  1999,  the  Company  had not  acquired  any direct  interests  in
petroleum and natural gas leases.

As of March 31, 2000, the Company had spent approximately  $201,875 in leasehold
acquisition  costs  and  costs  relating  to  the  identification  of  potential
properties and approximately  $398,000 for its capital and funding contributions
to Hilton LLC. See "Item 2. Description of Properties".

PRINCIPAL PRODUCTS OR SERVICES AND MARKETS

The Company is participating in exploration activities to locate crude petroleum
and natural  gas.  The  principal  markets for these  commodities  are  refining
companies,  natural gas transmission  pipeline companies,  utilities and private
industry  end-users,  which  purchase  the crude oil,  and natural gas  pipeline
companies, which purchase the gas.

COMPETITIVE  BUSINESS  CONDITIONS,  COMPETITIVE  POSITION  IN THE  INDUSTRY  AND
METHODS OF COMPETITION

The Company's  petroleum and natural gas exploration  activities in the state of
California will be undertaken in a highly  competitive and speculative  business
atmosphere.  In seeking any other suitable  petroleum and natural gas properties
for acquisition,  the Company will be competing with a number of other companies
located in the state of California  and elsewhere,  including  large oil and gas
companies and other  independent  operators  with greater  financial  resources.
Management does not believe that the Company's initial  competitive  position in
the petroleum and natural gas industry will be significant.

Management does not foresee any  difficulties in procuring  drilling rigs or the
manpower to run them in the area of its operations;  however,  several  factors,
including  increased  competition  in the area,  may limit the  availability  of
drilling rigs, rig operators and related  personnel  and/or  equipment;  such an
event  may  have  a  significant  adverse  impact  on the  profitability  of the
Company's operations.

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<PAGE>



The prices of the Company's  products are controlled by the world oil market and
the United States natural gas market. However,  competition in the petroleum and
natural gas  exploration  industry  exists in the form of competition to acquire
the most promising  acreage  blocks and obtaining the most favorable  prices for
transporting the product. The Company, and ventures in which it participates, is
relatively  small  compared  to other  petroleum  and  natural  gas  exploration
companies and may have difficulty  acquiring  additional acreage and/or projects
and arranging for the  transportation of product,  in the event the Company,  or
ventures in which it participates, is successful in its exploration efforts.

GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LAWS

At this time,  the  Company  does not offer or sell any  products  or  services;
however  it, or any  venture in which it  participates,  is  required  to obtain
permits for drilling oil or gas wells.

Exploration and production activities relating to oil and gas leases are subject
to numerous  environmental laws, rules and regulations.  The Federal Clean Water
Act requires the Company to construct a fresh water containment  barrier between
the surface of each drilling site and the underlying water table.

Various federal,  state and local laws and regulations covering the discharge of
materials into the environment,  or otherwise  relating to the protection of the
environment,  may affect the Company's operations and costs through their effect
on oil and gas exploration, development and production operations. Environmental
laws and  regulations  have changed  substantially  and rapidly over the last 20
years, and the Company anticipates that there will be continuing  changes.  Laws
and regulations  protecting the environment have generally become more stringent
in recent years,  and may in certain  circumstances  impose "strict  liability,"
rendering a  corporation  liable for  environmental  damages  without  regard to
negligence or fault on the part of such  corporation.  Such laws and regulations
may expose the Company to liability  for the conduct of operations or conditions
caused by others,  or for acts of the Company which were in compliance  with all
applicable  laws at the time  such  acts  were  performed.  Increasingly  strict
environmental  restrictions and limitations have resulted in increased operating
costs for the Company and other businesses  throughout the United States, and it
is possible that the costs of compliance with environmental laws and regulations
will continue to increase.  The  modification of existing laws or regulations or
the adoption of new laws or regulations relating to environmental  matters could
have a material  adverse effect on the Company's  operations.  In addition,  the
Company's existing and proposed  operations could result in liability for fires,
blowouts,  oil  spills,  discharge  of  hazardous  materials  into  surface  and
subsurface  aquifers  and other  environmental  damage,  any one of which  could
result in personal  injury,  loss of life,  property  damage or  destruction  or
suspension of operations.

The  Comprehensive  Environmental  Response,   Compensation  and  Liability  Act
("CERCLA"),  also known as the "Superfund" law, requires payments for cleanup of
certain  abandoned  waste  disposal  sites,  even  though  such  waste  disposal
activities were undertaken in compliance with regulations applicable at the time
of disposal.  Under the  Superfund  legislation,  one party may,  under  certain
circumstances,  be required to bear more than its proportional  share of cleanup
costs at a site where it has  responsibility  pursuant  to the  legislation,  if
payments cannot be obtained from other  responsible  parties.  Other legislation
mandates  cleanup of  certain  wastes at  facilities  that are  currently  being
operated.  States also have regulatory  programs that can mandate waste cleanup.
CERCLA  authorizes  the  Environmental  Protection  Agency  ("EPA") and, in some
cases, third parties to take actions in response to threats to the public health
or the  environment  and to seek to  recover  from the  responsible  classes  of
persons the costs they incur. The scope of financial  liability under these laws
involves inherent uncertainties.

It is not  anticipated  that the Company  will be required in the near future to
expend  amounts that are material in relation to its total capital  expenditures
program by reason of environmental  laws and  regulations,  but inasmuch as such
laws and  regulations are frequently  changed,  the Company is unable to predict
the ultimate cost of compliance.

The Company believes it is presently in compliance with all applicable  federal,
state or local  environmental  laws,  rules or regulations;  however,  continued
compliance  (or  failure to comply) and future  legislation  may have an adverse
impact on the Company's present and contemplated business operations.


                                        5

<PAGE>



The  foregoing  is only a brief  summary of some of the  existing  environmental
laws,  rules and  regulations  to which the Company's  business  operations  are
subject,  and there are many others,  the effects of which could have an adverse
impact on the Company.  Future legislation in this area will no doubt be enacted
and revisions will be made in current laws. No assurance can be given as to what
effect these  present and future laws,  rules and  regulations  will have on the
Company's current and future operations.

NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES

The Company presently has no full-time employees.  The officers and directors of
the Company have agreed to allocate a portion of their time to the activities of
the Company.  The Company does not expect any significant  changes in the number
of employees.  If it commences  full-scale oil and gas  operations,  the Company
plans to add additional full-time employees, exclusive of executive officers.

The Company's  officers and directors are involved with other companies who have
a  business  purpose  similar  to that of the  Company.  As a result,  potential
conflicts of interest may arise. If such a conflict does arise and an officer or
director  of  the  Company  is  presented  with  business   opportunities  under
circumstances  where there may be a doubt as to whether the  opportunity  should
belong to the Company or another  exploration  company they are affiliated with,
they will disclose the opportunity to all such companies.

RISK FACTORS

Due to the nature of the Company's business and the present stage of exploration
on its oil and gas prospects,  the following risk factors apply to the Company's
operations:

ACCUMULATED LOSSES

During  the year  ended  December  31,  1999,  the  Company  incurred  a loss of
$147,604.  To date  the  Company's  operations  have  not  generated  sufficient
operating  cash flows to  provide  working  capital  for the  Company's  ongoing
overhead, the funding of its petroleum property acquisitions and the exploration
and development of these properties. There can be no assurances that the Company
will be able to  successfully  develop any properties and achieve  profitability
from its operations.

ABSENCE OF A PUBLIC MARKET

As of April 10, 2000,  there is no market for the Company's  common  stock.  The
Company is  seeking a listing  on the  Over-the-Counter  Bulletin  Board  system
operated by the National  Association  of Securities  Dealers,  but there are no
assurances  that the  Company  will  obtain such a listing or that a market will
develop. Consequently, a holder of the Company's common stock may not be able to
liquidate  his or her  investment in the event of an emergency and shares of the
Company's common stock may not be accepted as collateral for loans.

EXPLORATION AND PRODUCTION RISKS

The business of exploring  for and  producing oil and gas involves a substantial
risk of investment  loss which even a combination of  experience,  knowledge and
careful  evaluation  may not be able to  overcome.  Drilling  oil and gas  wells
involves  the risk  that  the  wells  will be  unproductive  or  that,  although
productive,  the wells do not  produce  oil and/or gas in  economic  quantities.
Other hazards, such as unusual or unexpected geological  formations,  pressures,
fires, blowouts,  loss of circulation of drilling fluids or other conditions may
substantially   delay  or  prevent  completion  of  any  well.  Adverse  weather
conditions can also hinder  drilling  operations.  A productive  well may become
uneconomic in the event water or other  deleterious  substances are encountered,
which  impair or prevent  the  production  of oil  and/or gas from the well.  In
addition, production from any well may be unmarketable if it is impregnated with
water or other deleterious substances. As with any petroleum property, there can
be no assurance  that oil and gas will be produced from the  properties in which
the Company, or any venture in which it participates, may obtain an interest. In
addition,

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the  marketability  of oil and gas which may be acquired or  discovered  will be
affected by numerous  factors  beyond the control of the Company.  These factors
include the  proximity  and  capacity of oil and gas  pipelines  and  processing
equipment,  market  fluctuations  of  prices,  taxes,  royalties,  land  tenure,
allowable production and environmental  protection.  The extent of these factors
cannot be accurately  predicted,  but any one or a combination  of these factors
may result in the Company not receiving an adequate return on invested  capital.
There is no  assurance  that crude oil or natural gas in  commercial  quantities
will  be  discovered  by the  Company,  or any  venture  in  which  the  Company
participates.

FINANCING RISKS

The  Company  has relied on the sale of its equity  capital to fund the  initial
acquisition  of its interest in Hilton LLC,  the  acquisition  of its  petroleum
properties and for working capital.  It has no assurance that additional funding
will be available to it to fund the  acquisition,  exploration or development of
any  additional  properties.  There can be no assurance that the Company will be
able to  obtain  adequate  financing  in the  future  or that the  terms of such
financing will be favorable.  Failure to generate  operating cash flow or obtain
additional  financing  could  result in  substantial  dilution of the  Company's
petroleum interests,  or delay or indefinite postponement of further exploration
and development of its projects with the possible loss of such properties.

UNINSURABLE RISKS

Although management believes the operator of any properties in which the Company
and its subsidiary may acquire interests,  will acquire and maintain appropriate
insurance  coverage in accordance with standard industry  practice,  the Company
and its  subsidiary may suffer losses from  uninsurable  hazards or from hazards
which the  operator or the Company has chosen not to insure  against  because of
high premium costs or other reasons.  The Company,  and its subsidiary intend to
engage in  participating  in the drilling of both  exploratory  and  development
wells. Exploratory wells have much greater dry hole risk than do wells which are
drilled offsetting  established  production.  The Company and its subsidiary may
become subject to liability for pollution, fire, explosion, blow-outs, cratering
and oil spills  against which it cannot insure or against which it may elect not
to insure.  Such events could result in substantial damage to oil and gas wells,
producing  facilities and other property and personal injury. The payment of any
such liabilities may have a material,  adverse effect on the Company's financial
position.

NO ASSURANCE OF TITLES

It is the practice of the Company in acquiring  petroleum and natural gas leases
or undivided  interests  in petroleum  and natural gas leases not to undergo the
expense of retaining  lawyers to examine the title to the mineral interest to be
placed under lease or already placed under lease.  Rather, the Company will rely
upon the  judgment of  petroleum  and natural gas lease  brokers or landsmen who
perform  the field work in  examining  records in the  appropriate  governmental
office before attempting to place under lease a specific mineral interest.  This
practice is widely followed in the petroleum and natural gas industry.  Prior to
the  drilling of a petroleum  and  natural gas well,  however,  it is the normal
practice in the  petroleum  and natural gas  industry  for the person or company
acting as the operator of the well to obtain a  preliminary  title review of the
spacing unit within which the proposed  petroleum  and natural gas well is to be
drilled  to  ensure  there  are no  obvious  deficiencies  in title to the well;
however, neither the Company or companies in which it invests, nor the person or
company  acting as operator of the well will obtain  counsel to examine title to
such spacing unit until the well is about to go into  production.  It frequently
happens,  as a result of such  examinations,  that certain curative work must be
done to  correct  deficiencies  in the  marketability  of the  title,  and  such
curative work entails expense.  The work might include  obtaining  affidavits of
heirship or causing an estate to be administered.  IT DOES HAPPEN,  FROM TIME TO
TIME, THAT THE EXAMINATION  MADE BY THE TITLE LAWYERS REVEALS THAT THE PETROLEUM
AND NATURAL GAS LEASE OR LEASES ARE  WORTHLESS,  HAVING BEEN  PURCHASED IN ERROR
FROM A PERSON  WHO IS NOT THE OWNER OF THE  MINERAL  INTEREST  DESIRED.  IN SUCH
INSTANCES, THE AMOUNT PAID FOR SUCH PETROLEUM AND NATURAL GAS LEASE OR LEASES IS
GENERALLY  LOST.  To date the Company has not lost title to any of its petroleum
and natural gas leases,  nor is the Company aware that any of its currently held
properties is subject to being lost as a result of faulty titles.


                                        7

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ENVIRONMENTAL REGULATIONS

In general,  the exploration and proposed  production  activities of the Company
are subject to certain federal, state and local laws and regulations relating to
environmental  quality and pollution control. Such laws and regulations increase
the costs of these  activities  and may  prevent  or delay the  commencement  or
continuance of a given operation. Compliance with these laws and regulations has
not had a material effect on the Company's  operations or financial condition to
date.  Specifically,  the Company is subject to legislation  regarding emissions
into the environment, water discharges, and storage and disposition of hazardous
wastes.  In addition,  legislation  has been  enacted  which  requires  well and
facility  sites to be  abandoned  and  reclaimed  to the  satisfaction  of state
authorities.  However,  such laws and regulations are frequently changed and the
Company  is  unable to  predict  the  ultimate  cost of  compliance.  Generally,
environmental  requirements  do not appear to affect the Company any differently
or to any greater or lesser extent than other companies in the industry.

The Company believes that its operations comply, in all material respects,  with
all applicable environmental regulations.

GOVERNMENTAL REGULATIONS

Petroleum and natural gas exploration, development and production are subject to
various types of regulation by local,  state and federal  agencies.  Legislation
affecting the petroleum  and natural gas industry is under  constant  review for
amendment and expansion.  Also, numerous departments and agencies,  both federal
and  state,  are  authorized  by  statute  to issue  and have  issued  rules and
regulations binding on the petroleum and natural gas industry and its individual
members,  some of which carry substantial  penalties for failure to comply.  The
regulatory  burden on the  petroleum  and natural  gas  industry  increases  the
Company's cost of doing business and,  consequently,  affects its profitability.
There is no assurance that laws and  regulations  enacted in the future will not
adversely  affect the petroleum and natural gas industry.  However,  since these
regulations  generally  apply  to  all  petroleum  and  natural  gas  producers,
management  of the Company  believes that these  regulations  should not put the
Company at a material  disadvantage  with respect to other petroleum and natural
gas producers.

Most  states  in which  the  Company  may own  and/or  operate  properties  have
statutes,  rules and regulations  governing  conservation  matters including the
unitization or pooling of petroleum and natural gas properties, establishment of
maximum rates of production from petroleum and natural gas wells and the spacing
of such wells.

Petroleum  and  natural  gas  mineral  rights  may be  held  by  individuals  or
corporations and, in certain  circumstances,  by governments having jurisdiction
over the area in which such  mineral  rights  are  located.  As a general  rule,
parties holding such mineral rights grant licenses or leases to third parties to
facilitate the exploration and development of these mineral rights. The terms of
the leases and licenses are generally established to require timely development.
Notwithstanding   the  ownership  of  mineral  rights,  the  government  of  the
jurisdiction  in which mineral rights are located  generally  retains  authority
over the manner of development of those rights.

In addition to royalties paid to freehold owners, each state generally imposes a
production or severance  tax with respect to  production  and sale of crude oil,
natural gas and natural gas liquids within their respective  jurisdictions.  For
the most part,  state production taxes are applied as a percentage of production
or sales.  Payment of these taxes are in the normal  course of operations in the
petroleum and natural gas industry and should not have a material  impact on the
Company's financial condition.

NATURAL GAS AND OIL PRICES

In recent decades, there have been periods of both worldwide  overproduction and
underproduction of hydrocarbons and periods of both increased and relaxed energy
conservation  efforts. Such conditions have resulted in periods of excess supply
of, and reduced demand for,  crude oil on a worldwide  basis and for natural gas
on a domestic basis. These periods have been followed by periods of short supply
of, and increased  demand for, crude oil and, to a lesser  extent,  natural gas.
The excess or short  supply of crude oil has placed  pressures on prices and has
resulted in dramatic price

                                        8

<PAGE>



fluctuations even during relatively short periods of seasonal market demand. The
price of natural gas has exhibited market demand fluctuations;  however, because
most of the natural gas consumed within the United States is produced within the
United  States,  the price of natural gas has not exhibited  the dramatic  price
fluctuations  that crude oil prices have  experienced  under  conditions of high
import levels.

COMPETITION

The petroleum and natural gas industry is intensely  competitive and the Company
competes  with  other  companies  which  have  greater  resources.  Many of such
companies not only explore for and produce  crude  petroleum and natural gas but
also carry on refining  operations and market  petroleum and other products on a
worldwide basis. Such companies may be able to pay more for productive petroleum
and natural gas properties and exploratory  prospects to define,  evaluate,  bid
for and purchase a greater number of properties and prospects than the Company's
financial or human resources permit. The Company's ability to acquire additional
properties  and to discover  reserves in the future will be  dependent  upon its
ability  to  evaluate  and  select   suitable   properties   and  to  consummate
transactions  in a highly  competitive  environment.  There is also  competition
between the petroleum and natural gas industry and other industries with respect
to the  supply of  energy  and fuel to  industrial,  commercial  and  individual
customers.  There is no assurance  that the Company will be able to  effectively
compete against such companies.

RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH

Because of its small  size,  the  Company  desires  to grow  rapidly in order to
achieve  certain  economies of scale.  Although  there is no assurance that this
rapid  growth  will occur,  to the extent  that it does  occur,  it will place a
significant  strain  on the  Company's  financial,  technical,  operational  and
administrative  resources.  As the Company  expands its activities and increases
the number of projects it is evaluating or in which it is  participating,  there
will  be  additional   demands  on  the  Company's   financial,   technical  and
administrative  resources.  The failure to  continue  to upgrade  the  Company's
technical,  administrative,  operating  and  financial  control  systems  or the
occurrence of unexpected expansion  difficulties,  including the recruitment and
retention of geoscientists  and engineers,  could have a material adverse effect
on the Company's business, financial condition and results of operations.

DEPENDENCE UPON KEY PERSONNEL

The  success of the  Company's  operations  and  activities  is  dependent  to a
significant  extent on the efforts and abilities of its management.  The loss of
services of any of its  management  could have a material  adverse effect on the
Company.  The  Company  has not  obtained  "key  man"  insurance  for any of its
management.

Mr. Bowes is the President of the Company. The loss of the services of Mr. Bowes
may adversely affect the business and prospects of the Company.

ADEQUATE LABOR

In the event the Company needs to employ additional  personnel,  it will need to
recruit qualified  personnel to staff its operations.  The Company believes that
such personnel  currently are available at reasonable  salaries and wages in the
geographic  areas in which the  Company  operates.  There  can be no  assurance,
however,  that such personnel will be available in the future.  In addition,  it
cannot be predicted whether the labor staffing at any of the Company's  projects
will be unionized, which may result in potentially higher operating costs.

DIVIDEND RISKS

The Company has not paid any  dividends on its common shares and does not intend
to pay dividends on its common shares in the immediate  future.  Any decision to
pay  dividends  on its common  shares in the future will be made by the board of
directors on the Company on the basis of earnings,  financial  requirements  and
other such conditions that may exist at that time.

                                        9

<PAGE>



CONFLICTS OF INTEREST

Certain of the  directors  also serve as  directors  of other  companies or have
significant  shareholdings in other companies and, to the extent that such other
companies may participate in ventures in which the Company may participate,  the
directors  of the Company may have a conflict  of  interest in  negotiating  and
concluding terms relating to the extent of such participation. In the event that
such a conflict of  interest  arises at a meeting of the board of  directors,  a
director  who has such a  conflict  will  disclose  the nature and extent of his
interest to the board of  directors  and abstain  from voting for or against the
approval of such a participation or such terms.

In accordance with the laws of the State of Nevada, the directors of the Company
are required to act honestly and in good faith with a view to the best interests
of the Company.  In determining whether or not the Company will participate in a
particular  program and the interest therein to be acquired by it, the directors
will  primarily  consider the degree of risk to which the Company may be exposed
and its financial position at that time.

See also "Item 13. Interest of Management in Certain Transactions."

PENNY STOCK REGULATION

The SEC has adopted  rules that regulate  broker-dealer  practices in connection
with  transactions  in  "penny  stock".  Generally,   penny  stocks  are  equity
securities with a price of less than $5.00 (other than securities  registered on
certain national  securities  exchanges or quoted on the NASDAQ system).  If the
Company's  shares  are  traded  for less than $5 per share  the  shares  will be
subject to the SEC's penny stock rules  unless (1) the  Company's  net  tangible
assets exceed  $5,000,000  during the Company's  first three years of continuous
operations  or $2,000,000  after the  Company's  first three years of continuous
operations;  or (2) the Company has had average  revenue of at least  $6,000,000
for the last three years. The penny stock rules require a  broker-dealer,  prior
to a  transaction  in a penny  stock not  otherwise  exempt  from the rules,  to
deliver a  standardized  risk  disclosure  document  prescribed  by the SEC that
provides information about penny stocks and the nature and level of risks in the
penny stock  market.  The  broker-dealer  also must  provide the  customer  with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and  its  salesperson  in the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account. In addition,  the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the  broker-dealer  must
make a  special  written  determination  that  the  penny  stock  is a  suitable
investment for the purchaser and receive the  purchaser's  written  agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny  stock  rules.  Should a trading  market for the  Company's  Common  Stock
commence and should the Company's Common Stock become subject to the penny stock
rules,  the holders of the Common Stock may find it difficult to sell the Common
Stock of the Company.

ENFORCEMENT OF LEGAL PROCESS

All of the directors and executive  officers of the Company  reside  outside the
United  States.  A substantial  portion of the assets of such persons and of the
Company are located  outside the United States.  As a result it may be difficult
or  impossible to effect  service of process  within the United States upon such
persons,  to bring suit in the United States or to enforce,  in the U.S. courts,
any judgment  obtained  there  against such  persons  predicated  upon any civil
liability  provisions of the U.S. federal  securities laws.  Canadian courts may
not  entertain  original  actions  against the  Company's  directors or officers
predicated  solely upon U.S.  federal  securities laws.  Furthermore,  judgments
predicated upon any civil liability  provisions of the U.S.  federal  securities
laws may not be directly  enforceable in Canada, and since most of the Company's
assets are  located  outside the United  States,  any  judgment  obtained in the
United States against the Company or such persons may not be collectible  within
the United States.

                                       10

<PAGE>



ITEM 2.           DESCRIPTION OF PROPERTY.

PETROLEUM AND NATURAL GAS PROPERTIES

The Company's  principal  business is the acquisition of leasehold  interests in
petroleum  and natural  gas  rights,  either  directly  or  indirectly,  and the
exploration  for and  development  of  petroleum  and  natural  gas.  All of the
Company's properties are located in the continental United States.

As of March 31,  2000,  the Company had  acquired the  following  petroleum  and
natural gas leases under the Consulting and  Overriding  Royalty  Agreement with
Davis & Namson:

WILLOW SPRINGS PROSPECT

Location: West side of the San Joaquin Basin in Townships 29 and 30 South, Range
21 East, Kern County, California.

Leases:  To date the  Company  acquired  one  petroleum  and  natural  gas lease
containing 65 acres from the United States Department of the Interior, Bureau of
Land  Management.  Currently  the Company,  through its land  broker,  is in the
process of  contacting  the  remaining  owners of the  petroleum and natural gas
rights to obtain leases covering a significant portion of the prospect.  Many of
the owners of the mineral rights have agreed to enter into petroleum and natural
gas  leases  with  respect to this  prospect.  Currently  the  Company is in the
process of completing legal  documentation to register these leases.  The leases
will have lessor royalty of between 12.5% to 20% with a term ranging between two
to ten years.

Ownership:  The Company expects to have a 100% working interest in the leases it
has acquires on the Willow Springs Prospect and net revenue  interests of 77% to
84.5% in those leases.  After acquiring a significant lease position the Company
may sell all or a portion of this prospect to fund its further activities.

Access and Topography: The Willow Springs Prospect is situated in low hills with
some small ravines.  The proposed  surface  location of an  exploration  well is
accessible by paved and well graded dirt roads.

Geological  Description:  The  Willow  Springs  Prospect  is a four  way  closed
anticline defined by well data including  stratigraphic  correlation,  dip meter
and core dip. The primary reservoir targets are the Phacoides sandstone, Oceanic
sandstone,  and  Point of Rocks  sandstone.  The  Phacoides  and  Point of Rocks
sandstones  are trapped by four way closure  whereas  the Oceanic  sandstone  is
trapped by a combination structure and stratigraphic trap. The seal with respect
to the  prospect is over 6,000 feet of shale  dominated  by Monterey and Temblor
formation.  The  prospect  size is  approximately  550 acres  for the  Phacoides
sandstone,  320 acres for the Oceanic sandstone,  and 600 acres for the Point of
Rocks  sandstone.  An  exploration  well to test this prospect  would be roughly
8,000 feet (MD). It is expected that the gravity of the oil, should it be found,
will be in the range of  35(degree)  to  50(degree)  API (a  measurement  of the
density of liquid  petroluem).  Light crude oil  generally has an API of between
35(degree) and 45(degree);  therefore, management believes the API of the oil is
economical to produce. This range was obtained from offsetting fields.

CROCKER CANYON PROSPECT

Location:  The  Crocker  Canyon  Prospect is located on the west side of the San
Joaquin  basin in Townships 30 and 31 South,  Range 21 East in Kern and San Luis
Obispo Counties, California.

Leases:  The Company acquired on March 16, 2000 two United States  Department of
the  Interior,  Bureau of Land  Management  petroleum  and  natural  gas  leases
totaling  2,732 net acres which cover the  prospect.  These leases are for a ten
year term with a 12.5% lessor royalty.

Ownership:  The Company has acquired a 100% working interest in the Canyon Creek
Prospect, with an 84.5% net revenue interest in the prospect. It may sell all or
a portion of this prospect to fund further activities.

                                       11

<PAGE>



Access and Topography:  The surface area is mountainous with steep ravines.  The
proposed exploration well drill site is accessible by paved and well graded dirt
roads.

Geological Description: The Canyon Creek prospect is a four way closed anticline
defined by well data  including  stratigraphic  correlation;  dip meter and core
dip.  The  primary  reservoir  targets  are the  Carneros  sandstone,  Phacoides
sandstone,  Oceanic sandstone and the Point of Rocks. For the Carneros sandstone
the  closure  area  prospect  size is  between  2,150  to 3,400  acres  with the
remaining  three  reservoirs  having a closure area  (prospect  size) of between
1,300 to 2,300  acres.  The seal for this  prospect  is over 8,000 feet of shale
dominated  Monterey and Temblor  formations.  An  exploration  well to test this
prospect would be drilled to approximately 10,000 feet (MD). It is expected that
the gravity of the oil would range between 35(degree) to 50(degree);  therefore,
management believes the API of the oil is economical to produce.  API based upon
the gravity of oil in offsetting fields.

BITTERWATER CREEK & MIDWAY PEAK PROSPECTS

Exploration prospects were generated by Davis & Namson for the Bitterwater Creek
and Midway Peak prospects.  A large percentage of these prospects are owned (but
not leased) by the United  States  Department  of the  Interior,  Bureau of Land
Management.  The Company  requested  that leases  covering  these  prospects  be
tendered  for sale at the March  16,  2000  competitive  lease  sale.  After due
consideration of the Company's request the Bureau of Land Management declined to
tender these leases for sale given that a large portion of the requested  leases
were located within the Carrizo Plain Natural Area which is currently subject to
review for creation of a  restricted  surface  access  area.  Given that a large
proportion of these two prospects are covered by old natural gas rights owned by
the Bureau of Land  Management  the Company  has  elected not to further  pursue
these prospects until the Bureau of Land Management  agrees to tender the rights
for lease sale.

OTHER ASSETS

As of December 31, 1999,  Hilton LLC owned a 2.25%  working  interest in various
petroleum and natural gas prospects (the "San Joaquin Joint Venture") in the San
Joaquin Basin and was required to pay 4% of the costs to drill the initial wells
on each of the initial  three  prospects in the San Joaquin Joint Venture and 3%
of the costs on any subsequent wells. As a member of Hilton LLC, San Joaquin was
required to fund its pro-rata  share of all the capital  requirements  of Hilton
LLC.  In the  event  that San  Joaquin  failed to pay its  additional  cash call
capital  contributions  within  a  specified  time  period,  San  Joaquin,  as a
defaulting  member,  would lose its  interest in Hilton LLC to Hilton  Petroleum
Ltd.  If the  default  were to occur  within 24 months  of the  initial  capital
contribution,  San  Joaquin  would,  no sooner  than 12  months  if the  default
occurred  before 12 months,  receive common shares of Hilton  Petroleum Ltd. for
its investment at the then prevailing  prices,  for its investment cost. If such
failure were to occur after 24 months then Hilton  Petroleum Ltd. would fund the
capital  contribution of San Joaquin and retain San Joaquin's share of cash flow
until 300% of the  defaulted  cash call is repaid to Hilton  Petroleum  Ltd.  On
April 4, 2000, San Joaquin advised Hilton LLC and Hilton  Petroleum Ltd. that it
would no longer  fund any  further  capital  contributions  and has  elected  to
receive  common  shares of Hilton  Petroleum  Ltd.  The number of shares will be
determined in accordance with Hilton LLC's operating agreement. According to the
terms of the operating agreement, the Company cannot obtain the Hilton Petroleum
Ltd. common shares prior to September 30, 2000, and the number of shares will be
based upon the  average of the closing  price of the shares of Hilton  Petroleum
Ltd. on the  Canadian  Venture  Exchange  for the 30-days  immediately  prior to
September  30, 2000.  As of March 31, 2000,  the Company had paid  approximately
$398,000 for its share of capital and funding contributions to Hilton LLC.


                                       12

<PAGE>




UNDEVELOPED ACREAGE

As of December 31, 1999 and March 31, 2000, the Company, directly or indirectly,
held undeveloped acreage as follows:


<TABLE>
<CAPTION>
                                                  December 31, 1999                         March 31, 2000
                                          ---------------------------------        --------------------------------

<S>                                                      <C>                                     <C>
Undeveloped Acres:
         Gross                                          -0-(1)<F1>                               2,797
         Net                                            -0-(1)<F1>                               2,797


<FN>
<F1>
(1)      Not including any interest owned by the Company through Hilton LLC in the San Joaquin Joint Venture.
</FN>
</TABLE>


As of March  31,  the  Company  had  acquired  three  leases  from  the  federal
government.  Each lease is for a period of 10 years.  The Company is required to
pay  $1/acre  per year to the federal  government  under each  lease.  The lease
payments  relating to the Willow Springs Prospect are $65 per year and the lease
payments  relating to the Crocker  Canyon  Prospect  are $2,732 per year.  These
leases  are  also  subject  to a  royalty  of  12.5%  to  the  leaseholders  and
approximately 3% to Davis & Namson.

The Company is continuing with the negotiation,  acquisition and registration of
additional petroleum and natural gas leases.

PRINCIPAL OFFICES

The Company  operates  from its offices at 53 Stratford  Place,  S.W.,  Calgary,
Alberta T3H 1H7 Canada. Space is provided to the Company on a rent free basis by
Mr.  Bowes,  an officer,  director  and  principal  shareholder  of the Company.
Management  believes  that  this  space  will meet the  Company's  needs for the
foreseeable future.


ITEM 3.           LEGAL PROCEEDINGS.

Not Applicable.


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

By written consent dated December 15, 1999,  shareholders of the Company holding
608,000 of the 1,000,000  outstanding  shares  (60.8%) of the  Company's  common
stock approved and adopted the amendments  contained in the Amended and Restated
Articles of Incorporation and the Company's 1999 Stock Option Plan.


                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

As of April  10,  2000,  no  public  market  exists  for the  Company's  shares.
Management  intends to seek market makers to quote the  Company's  shares on the
Over-the-Counter Bulletin Board (the "OTC Bulletin Board").  Management does not
know if, or when, a market will exist for the Company's shares.


                                       13

<PAGE>



As of April 10,  2000,  there were 104 record  holders of the  Company's  Common
Stock.

During the last two fiscal years,  no cash  dividends  have been declared on the
Company's common stock and management does not anticipate that dividends will be
paid in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

Pursuant to the terms of the  Agreement  and Plan of  Reorganization,  effective
December 31, 1999,  the Company issued  8,069,000  shares of its common stock in
exchange for all of the issued and outstanding common stock of San Joaquin.  The
shares were issued  pursuant to Rule 506 of  Regulation  D,  promulgated  by the
Securities and Exchange  Commission.  The shares were issued to not more than 35
non-accredited investors and bear restrictive legends.


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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING RESULTS

The following discussion of the results of operations of the Company for the the
period from  inception  (September 14, 1999) to December 31, 1999 should be read
in conjunction  with the  consolidated  financial  statements of the Company and
related notes included therein.

The  Independent  Accountant's  Report  and  Note 2 of the  Notes  to  Financial
Statements accompanying this report state that substantial doubt has been raised
about the Company's  ability to continue as a going concern.  The ability of the
Company to continue  operations as a going concern is dependent upon its success
in  obtaining  capital  through  sale of common  stock or other  securities  and
ultimately achieving profitable operations.

BUSINESS COMBINATION

LEK International,  Inc. ("LEK") was incorporated for the purpose of evaluating,
structuring  and  completion  of a merger with,  or acquiring a privately  owned
corporation.  On December 31, 1999,  LEK  completed  the  Agreement  and Plan of
Reorganization whereby it issued 8,069,000 shares of its common stock to acquire
all of the shares of San Joaquin.  San Joaquin is an independent  energy company
engaged in the exploration, development and acquisition of crude oil and natural
gas reserves in the western United States and is considered a development  stage
company as defined by Statement of Financial  Accounting Standards (SFAS) No. 7.
San Joaquin is an  exploration  stage oil and gas company and as of December 31,
1999, has not earned any production  revenue,  nor found proved resources on any
of its properties.  San Joaquin's principal activities have been raising capital
through the sale of its securities, identifying and evaluating potential oil and
gas property acquisitions, and acquiring an interest in Hilton LLC.

As a result of this transaction, San Joaquin became a wholly-owned subsidiary of
LEK,  and  effective  January  17,  2000,  LEK  changed  its name to San Joaquin
Resources Inc. Since this transaction resulted in the former shareholders of San
Joaquin acquiring control of LEK, for financial  reporting purposes the business
combination was accounted for as an additional  capitalization of LEK (a reverse
acquisition with San Joaquin as the accounting acquirer).  The operations of San
Joaquin will be the only continuing operations of the Company. In accounting for
this transaction:

i)       San  Joaquin  was deemed to be the  purchaser  and parent  company  for
         financial reporting purposes. Accordingly, its net assets were included
         in the consolidated balance sheet at their historical book value;

ii)      control of the net assets and  business of LEK was  acquired  effective
         December 31, 1999, for no consideration; and

iii)     the  consolidated  financial  statements of  operations,  stockholders'
         equity and cash flow include San Joaquin's  results of  operations  and
         changes in cash flow for the period from inception, September 14, 1999,
         to December 31, 1999.


                                       14

<PAGE>



The Company's fiscal year end is December 31.

YEAR 2000 READINESS DISCLOSURE

The Year 2000 issue refers to the  inability  of computer and other  information
technology  systems to properly  process  date and time  information  due to the
programming  of a two digit year rather than a four digit year. The risk is that
a system will  recognize  the digits "00" as 1900 rather than the year 2000,  or
that the system may not recognize "00" as a year at all. As a result,  computers
and embedded  processing systems may be at risk of malfunctioning,  particularly
during the transition from 1999 to 2000.

During 1999, the Company assessed the impact of Year 2000 issues on its business
operations.  The Year 2000 issue may affect the Company in four principal  areas
including:  computer  systems  such as personal  computers,  operating  systems,
business  software,  and  application  software  including  accounting  systems,
technical support software and administration  software; field assets (primarily
embedded  systems) such as programmable  logic controllers and equipment control
panels;  other systems such as telephones,  photocopiers and facsimile machines;
and third-party suppliers such as joint venture partners, customers who purchase
natural gas and crude oil,  suppliers  of field parts and  services  and service
providers such as banks and insurance companies. The Company has implemented and
tested its computer  software and  hardware,  field assets and other systems for
Year 2000 compliance.

The  Company's  Year 2000  program is designed to reduce the  Company's  risk of
material  losses due to the Year 2000  issue.  However,  the  Company  cannot be
certain that all aspects of Year 2000  compliance  will be resolved,  especially
with respect to third parties upon which the Company is  dependent,  nor can the
Company be certain that it will be able to develop  contingency plans which will
adequately  address all  anticipated  or  unexpected  failures.  Therefore,  the
Company  cannot  provide  assurance that the Year 2000 issue will not materially
and adversely affect the Company's operations and financial results.

As of March 31,  2000,  the Company has not  experienced  any Year 2000  related
problems.

OVERVIEW

The Company, through its subsidiary,  San Joaquin, is engaged in the business of
acquiring and exploring for petroleum and natural gas prospects.

The  Company  follows  the  full  cost  method  of  accounting  for  oil and gas
operations.  Under this  method all costs  related  to the  exploration  for and
development  of oil and gas reserves  are  capitalized  on a  country-by-country
basis.  Costs  include  lease  acquisition  costs,  geological  and  geophysical
expenses,  overhead  directly related to exploration and development  activities
and costs of drilling both productive and  non-productive  wells.  Proceeds from
the sale of properties are applied against  capitalized costs,  without any gain
or loss being recognized,  unless such a sale would significantly alter the rate
of depletion and depreciation.

Depletion of exploration  and development  costs and  depreciation of production
equipment is provided using the unit-of-  production method based upon estimated
proven oil and gas reserves. The costs of significant unevaluated properties are
excluded  from costs  subject  to  depletion.  For  depletion  and  depreciation
purposes,  relative volumes of oil and gas production and reserves are converted
at the energy  equivalent  conversion rate of six thousand cubic feet of natural
gas to one barrel of crude oil.


                                       15

<PAGE>



In applying  the full cost method,  the Company  performs a ceiling test whereby
the carrying value of oil and gas properties  and production  equipment,  net of
recorded future income taxes and the accumulated  provision for site restoration
and abandonment  costs,  is compared  annually to an estimate of future net cash
flow from the production of proven  reserves.  Costs related to undeveloped  oil
and gas properties are excluded from the ceiling test.  Discounted net cash flow
is  estimated  using  year  end  prices,   less  estimated  future  general  and
administrative   expenses,   financing  costs  and  income  taxes.  Should  this
comparison  indicate an excess  carrying  value,  the excess is charged  against
earnings. At December 31, 1999, there were no reserves.

RESULTS OF OPERATIONS

PERIOD FROM SEPTEMBER 14, 1999 (INCEPTION) TO DECEMBER 31, 1999

During the period ended  December 31, 1999,  the Company  recorded a net loss of
$147,604, a loss of $0.03 per common share. During the period the Company earned
interest  revenue of $5,784 as a result of interest earned on deposits held from
funds received from the Company's equity financings.

During 1999, the Company  incurred  total expenses of $155,058.  Of this amount,
the majority of the costs (audit and legal costs of $21,148,  professional  fees
of $95,362, and travel costs of $33,212) related to the Company's acquisition of
San Joaquin. Included in professional fees was $18,000 relating to the salary of
the current President of the Company.

During 1999, the Company paid $390,000 for its four  membership  units in Hilton
LLC and incurred  $192,590 for costs of  identifying  and reviewing  prospective
petroleum and natural gas leases.  Although no properties were acquired in 1999,
a number of prospects  were  acquired in 2000 and  additional  acquisitions  are
ongoing. See "Item 2. Material  Properties".  In 1999, the Company also received
$70,000 on the granting of an option to CEW to  participate  in the  exploration
and  development  of  properties  acquired by the Company.  These  proceeds were
credited to property costs.

The Company  completed  equity  financings  totalling  $990,745 during 1999. The
proceeds have been used as described  above,  with the  remainder  allocated for
additional property acquisitions and general working capital.

LIQUIDITY AND PLAN OF OPERATIONS

In  management's  view,  given the  nature of the  Company's  operations,  which
consist of the acquisition,  exploration and evaluation of petroleum and natural
gas properties, the most meaningful information relates to current liquidity and
solvency.  The Company's  financial success will be dependent upon the extent to
which it can discover sufficient economic reserves and successfully  develop the
properties.  Such  development  may take  years to  complete  and the  amount of
resulting  income,  if any, is difficult to determine  with any  certainty.  The
sales value of any petroleum or natural gas discovered by the Company is largely
dependent upon other factors beyond the Company's control.

To date, the Company's capital needs have been met by equity  financings.  As at
March 31, 2000, the Company had approximately  $197,000 in cash which management
has allocated to:

i)       acquire  approximately 650 acres of petroleum and natural gas leases in
         the Willow Springs project; and

ii)      continue to fund the retainer fees to Davis & Namson through  September
         2000. Davis & Namson has additional  prospects in the San Joaquin Basin
         on which  they  need to carry  out  additional  geological  studies  to
         determine if the prospects  satisfy the  Company's  criteria to justify
         acquiring petroleum and natural gas leases covering said prospects.

In order to reduce its outlay of capital  the Company has decided to convert its
interest in the Hilton LLC into common shares of Hilton Petroleum Ltd. By making
this  election the Company is no longer  subject to cash calls for wells drilled
in the San  Joaquin  Joint  Venture.  Pursuant  to the  terms  of the  operating
agreement of Hilton LLC, it is anticipated that

                                       16

<PAGE>



the  Company  will  receive  shares  in  Hilton  Petroleum  Ltd.  See  "Item  2.
Description  of  Properties  - Other  Assets." The number of shares to be issued
cannot be determined at this time. The agreement  provides that no shares can be
issued until twelve  months after the date of the  investment in the Hilton LLC,
which in the case of the Company is September 30, 2000.  In addition,  the price
for the shares of Hilton  Petroleum Ltd. will be determined at this future date.
The objective of the agreement is to reimburse the Company for its investment in
Hilton LLC with common shares of Hilton Petroleum Ltd.

It is  anticipated  these  shares in Hilton  Petroleum  Ltd.  will be sold in an
orderly manner on the Canadian  Venture Exchange in the fourth quarter year 2000
and the first half of the year 2001.  The money  received from the sale of these
shares will be used to fund the further  activity of the  Company.  There are no
assurances that the Company will be able to sell the shares of Hilton  Petroleum
Ltd. which the Company  receives or that the Company will realize an amount upon
any such sales sufficient to reimburse the Company for its expenditures.

It is the intention of the Company to raise additional  capital in the following
ways to fund the  acquisition of additional  prospects and to drill  exploration
wells on the Willow Springs and Crocker Canyon prospects:

         a.       Farmout  both  Willow  Springs and  Crocker  Canyon  prospects
                  whereby the Company will be carried through the cost to drill,
                  complete,  equip  or  abandon  an  exploration  well  on  each
                  prospect  and retain a  negotiated  working  interest  in each
                  prospect.  Alternatively, the Company may elect to sell all or
                  portions of Willow Springs  and/or  Crocker Canyon  prospects.
                  The  funds  derived  from  the  sale  could be used to pay the
                  Company's  portion  of the cost to drill,  complete,  equip or
                  abandon an  exploration  wellon the working  interest  Company
                  retains in the prospects.

         b.       By raising  additional  capital through a private placement of
                  common stock of the Company.

During  2000  the  operational  plans  for the  Company  entail  conducting  the
following:

         a.       Complete  acquisition  of petroleum  and natural gas leases in
                  the Willow Springs Prospect.

         b.       Continue  the  services  of  Davis  &  Namson  in   generating
                  prospects  in the San Joaquin  Basin which will be accepted or
                  rejected by the  Company.  In prospects  the Company  accepts,
                  acquire  available  petroleum and natural gas leases  covering
                  said prospects.

         c.       Either  sell all or a portion  of its  interest  in the Willow
                  Springs  and  Crocker  Canyon  prospects  or,   alternatively,
                  farmout  its  interest  in  said  prospects.  This  action  is
                  necessary to facilitate the drilling of an exploration well on
                  each prospect in year 2000 or early year 2001.

The  Company's  ability to continue  as a going  concern is  dependent  upon its
ability to generate  sufficient  cash flow to meet its  obligations  on a timely
basis, to obtain additional  financing (through the sale of its equity interests
or  interests  in  its  properties)  or  refinancing  as may  be  required,  and
ultimately to attain  profitability.  There are no  assurances  that the Company
will be able to obtain any such  financing  or, if the Company is able to obtain
additional  financing,  that such  financing  will be on terms  favorable to the
Company.  The inability to obtain  additional  financing when needed will have a
material adverse effect on the Company's operating results.


ITEM 7.           FINANCIAL STATEMENTS.

Please refer to the pages beginning with F-1.



                                       17

<PAGE>



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

Effective  January  2000,  Kish,  Leake  &  Associates,  P.C.,  resigned  as the
Company's independent accountants, and the Company engaged Wheeler Wasoff, P.C.,
Denver, Colorado, as the Company's new independent accountants.

There were no  disagreements  or reportable  events between the Company or Kish,
Leake & Associates, P.C.

Prior to the  engagement  of Wheeler  Wasoff,  P.C.  the Company did not consult
Wheeler Wasoff,  P.C.  regarding any of the matters identified in Item 304(a)(2)
of Regulation S-B.

The resignation of Kish,  Leake & Associates,  P.C. and the retention of Wheeler
Wasoff, P.C., was approved by the Company's Board of Directors.


                                    PART III

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

The officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
<S>                                 <C>
         J. Timothy Bowes           President and director since December 31, 1999.
         Nick DeMare                Secretary, Treasurer and director since December 31, 1999.
         Colin S. McNeil            Director since December 31, 1999.
</TABLE>

The  directors  of the  Company  are  elected  to serve  until  the next  annual
shareholders'  meeting or until  their  respective  successors  are  elected and
qualified. Officers of the Company hold office until the meeting of the Board of
Directors  immediately  following the next annual shareholders' meeting or until
removal by the Board of Directors.  Interim replacements for resigning directors
and officers  are  appointed  by the Board of  Directors.  As of April 10, 2000,
directors of the Company  received no  compensation  solely for their service as
directors.  Set forth below are brief  descriptions of the recent employment and
business experience of the Company's officers and directors.

J. TIMOTHY  BOWES (AGE 44): Mr. Bowes holds a Bachelor of Commerce  degree and a
Masters of Business  Administration  degree, both from the University of British
Columbia.  On October 26, 1999, Mr. Bowes became the President,  Chief Executive
Officer,  and a director of Lucre Ventures Ltd., a public  petroleum and natural
gas  company  listed  on the  Canadian  Venture  Exchange.  Prior  to Mr.  Bowes
employment with the Company and Lucre Ventures Ltd., he was primarily engaged as
a  self-employed   consultant   involved  in  the  structuring  of  mergers  and
acquisitions  of petroleum and natural gas companies.  Prior to starting his own
consulting business,  Mr. Bowes was employed by Yorkton Securities Inc. He began
working  for  Yorkton in October  1994 as a Senior  Analyst  for  petroleum  and
natural gas properties.  Mr. Bowes held several positions at Yorkton in which he
was responsible  for, among other things,  reviewing,  structuring and approving
all initial public offerings  generated from Yorkton's Calgary Office during the
period from June 1995 to April 1997.  From April 1997 to March 1999,  Mr.  Bowes
was the Vice President Corporate Finance in the Natural Resources section of the
Calgary office of Yorkton Securities (subject to regulatory approval).


Prior to Mr. Bowes' employment with Yorkton, he was employed as the Land Manager
of Numac  Energy  Inc.,  which was  created  as a result  of the 1993  merger of
Westcoast Petroleum Ltd. and Numac Oil & Gas Ltd. Prior to the merger, Mr. Bowes
was the Land Manager for Westcoast Petroleum Ltd.

NICK DEMARE (AGE 45): Mr.  DeMare  holds a Bachelor of Commerce  degree from the
University of British Columbia and is a member in good standing of the Institute
of  Chartered  Accountants  of British  Columbia.  He is the  President of Chase
Management Ltd., a private British Columbia company which provides a broad range
of administrative,

                                       18

<PAGE>



management  and financial  services to private and public  companies with varied
interests in mineral  exploration and development,  gold and silver  production,
petroleum and natural gas and venture  capital.  In addition to various Canadian
public  companies,  Mr.  DeMare is a director of the  following  U.S.  reporting
companies: Hilton Petroleum Ltd., Trimark Oil & Gas Ltd., IMA Exploration, Inc.,
Peruvian Gold Limited and Ardis Telecom and Technologies, Inc.

COLIN S.  MCNEIL (AGE 52):  Mr.  McNeil  holds a Bachelor  of Science  (Geology)
degree from the  University of Calgary.  Since 1996 he has been the President of
C. McNeil and  Associates  Inc., a private  company  which  provides  geological
consulting  services to clients for domestic and  international  exploration and
development projects.  Mr. McNeil is a member of the board of directors of Pilot
Energy Corp.  and Mount Dakota  Energy Corp.  From June 1996 to March 1997,  Mr.
McNeil  was the Vice  President,  Chief  Financial  Officer  and a  director  of
Briggand Energy Corp., where he assisted in the formation, financing and listing
of Briggand on the Alberta Stock Exchange. In addition, Mr. McNeil assisted with
a  reverse-takeover  between Briggand and Canop Worldwide Corp. During 1995, Mr.
McNeil was the  President of Hyenergy  Corp.,  a private  corporation  formed to
evaluate and purchase  production assets.  From 1993 to 1994, Mr. McNeil was the
Manager of  International  Exploration  for Numac  Energy  Inc.  Mr.  McNeil was
responsible  for managing and directing an exploration  budget of  approximately
$10 million. Mr. McNeil also participated in and managed exploration programs in
Libya  and  Indonesia,  evaluated  exploration,  development  and  enhanced  oil
recovery projects in Africa, South America, the Middle East, and South-East Asia
for Numac.  While with Numac, Mr. McNeil managed and participated in a worldwide
"scoping" study to determine the future direction of Numac.

Mr. McNeil is a member of the Association of Professional Engineers,  Geologists
and  Geophysicists  of Alberta,  the Society of Exploration  Geophysicists,  the
Canadian  Society of  Exploration  Geophysicists,  the American  Association  of
Petroleum Geologists, and the Canadian Society of Petroleum Geologists.

CONFLICTS OF INTEREST

Members of the Company's  management are associated with other firms involved in
a range of  business  activities.  Consequently,  there are  potential  inherent
conflicts of interest in their acting as officers and  directors of the Company.
Insofar as the officers and directors are engaged in other business  activities,
management anticipates they will devote as much time to the Company's affairs as
is reasonably needed.

The officers and  directors of the Company are now and may in the future  become
shareholders,  officers or directors of other  companies which may be formed for
the purpose of engaging in business activities similar to those conducted by the
Company.  Accordingly,  additional direct conflicts of interest may arise in the
future with respect to such individuals acting on behalf of the Company or other
entities.  Moreover,  additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or  otherwise.  The Company does not  currently  have a right of
first refusal  pertaining to opportunities  that come to management's  attention
insofar as such opportunities may relate to the Company's business operations.

The officers and directors are, so long as they are officers or directors of the
Company,  subject to the restriction that all opportunities  contemplated by the
Company's  plan of  operation  which  come to  their  attention,  either  in the
performance  of  their  duties  or in  any  other  manner,  will  be  considered
opportunities  of, and be made  available to the Company and the companies  that
they are affiliated with on an equal basis. A breach of this requirement will be
a breach of the fiduciary  duties of the officer or director.  If the Company or
the  companies in which the  officers and  directors  are  affiliated  with both
desire to take  advantage of an  opportunity,  then said  officers and directors
would abstain from  negotiating and voting upon the  opportunity.  However,  all
directors may still  individually take advantage of opportunities if the Company
should decline to do so. Except as set forth above,  the Company has not adopted
any other conflict of interest policy with respect to such transactions.

The  Company  does not have any  standing  audit,  nominating,  or  compensation
committees of the Board of Directors.


                                       19

<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers and directors,  and persons who own more than 10% of a registered class
of the Company's equity securities,  to file reports of ownership and changes in
ownership with the Securities and Exchange Commission.  Officers,  directors and
greater than 10% percent  shareholders are required by SEC regulation to furnish
the Company  with copies of all  Section  16(a) forms they file.  David Ward and
Robert  Hemmerling were each required to file an Initial Statement of Beneficial
Ownership  of  Securities  on  Form 3 at the  time  of the  registration  of the
Company's  securities  under  Section  12(g) of the  Exchange  Act.  To the best
knowledge  and belief of the Company,  none of such persons made a timely filing
of Form 3. None of such  persons  filed a report on Form 5 for the  fiscal  year
ended March 31, 1999. To the best of the Company's knowledge, with the exception
of Mr. Bowes, no reports have been filed by any persons who owned 10% or more of
the Company's registered equity securities.


ITEM 10.          EXECUTIVE COMPENSATION.

The following table sets forth  information for David Ward and J. Timothy Bowes.
Mr. Ward and Mr.  Bowes each served as the  Company's  Chief  Executive  Officer
("CEO")  during the fiscal year ended  December 31, 1999. No disclosure  need be
provided  for any  executive  officer,  other than the CEO,  whose total  annual
salary and bonus for the last  completed  fiscal  year did not exceed  $100,000.
Accordingly,  no other  executive  officers of the  Company are  included in the
table.

<TABLE>
<CAPTION>

                                                                                     LONG TERM COMPENSATION

                                              ANNUAL COMPENSATION                 AWARDS              PAYOUTS

                                                              OTHER       RESTRICTED   SECURITIES
NAME AND                                                      ANNUAL         STOCK     UNDERLYING                    ALL OTHER
PRINCIPAL                                                     COMPEN-       AWARD(S)    OPTIONS /       LTIP          COMPEN-
POSITION              YEAR          SALARY($)     BONUS($)    SATION ($)      ($)        SARS ($)     PAYOUTS ($)    SATION ($)


<S>                  <C>             <C>             <C>        <C>           <C>          <C>           <C>            <C>
David Ward,          1999(3)<F3>        -0-          -0-        -0-           -0-          -0-           -0-            -0-
Former               1999(4)<F4>        -0-          -0-        -0-           -0-          -0-           -0-            -0-
President and        1998(5)<F5>        -0-          -0-        -0-           -0-          -0-           -0-            -0-
Former Chief
Executive
Officer(1)<F1>

J. Timothy             1999          18,000(6)<F6>   -0-        -0-           -0-          -0-           -0-            -0-
Bowes
President and
Chief
Executive
Officer(2)<F2>


<FN>
<F1>
(1)      Mr. Ward  resigned effective December 31, 1999.
<F2>
(2)      Mr. Bowes was appointed effective December 31, 1999.
<F3>
(3)      Fiscal year ended December 31, 1999.
<F4>
(4)      Fiscal year ended March 31, 1999.
<F5>
(5)      Fiscal year ended March 31, 1998.
<F6>
(6)      San Joaquin has agreed to  compensate  Mr.  Bowes at the rate of $6,000
         per month.  The  compensation  included in the table includes Mr. Bowes
         compensation from San Joaquin.
</FN>
</TABLE>


The Company does not have any  employment  contracts with any of its officers or
directors. Such persons are employed by the Company on an at will basis, and the
terms and  conditions  of  employment  are subject to change by the Company.  At
December  31,  1998 and 1999,  none of the  Named  Executive  Officers  held any
options to acquire shares of the

                                       20

<PAGE>



Company's stock.

STOCK OPTION PLANS

By written  consent dated  December 15, 1999,  the  shareholders  of the Company
adopted the Company's 1999 Stock Option Plan to be effective January 17, 2000.

Pursuant to the 1999 Stock  Option Plan (the  "Plan") an  aggregate of 1,176,900
shares of the Company's common stock (the "Available  Shares") has been reserved
for issuance pursuant to the exercise of stock options  ("Options") which may be
granted to employees,  officers, and directors of the Company and consultants to
the  Company.  The Plan also  provides  for annual  adjustment  in the number of
Available  Shares,  commencing  upon the beginning of the next fiscal year, to a
number  equal to 10% of the  number of shares  outstanding  as of the end of the
preceding fiscal year or 1,176,900 shares, whichever is greater.

The Plan is  designed  to (i)  induce  qualified  persons  to become  employees,
officers,  or  directors  of the  Company;  (ii)  reward  such  persons for past
services to the Company; (iii) encourage such persons to remain in the employ of
the  Company  or  associated  with  the  Company;  and (iv)  provide  additional
incentive  for such  persons to put forth  maximum  efforts  for the  success of
business of the Company. No stock options have been granted under this Plan.

The Plan will be  administered  by the the  Board of  Directors  (the  "Board").
Transactions  under  the  Plan  are  intended  to  comply  with  all  applicable
conditions of Rule 16b-3 under the  Securities  Exchange Act of 1934, as amended
(the "1934 Act").  In addition to determining who will be granted  Options,  the
Board has the authority and discretion to determine when Options will be granted
and the number of Options to be granted.  The Board may determine  which Options
may be intended to qualify  ("Incentive  Stock  Option")  for special  treatment
under the  Internal  Revenue  Code of 1986,  as  amended  from time to time (the
"Code") or Non-Qualified  Options  ("Non-Qualified Stock Options") which are not
intended to so qualify.  See "Federal Income Tax Consequences"  below. The Board
also may determine the time or times when each Option becomes  exercisable,  the
duration  of the  exercise  period  for  Options  and the  form or  forms of the
instruments  evidencing  Options  granted  under the Plan.  The Board may adopt,
amend, and rescind such rules and regulations as in its opinion may be advisable
for the  administration  of the Plan.  The  Board  may  amend  the Plan  without
shareholder  approval  where  such  approval  is not  required  to  satisfy  any
statutory or regulatory requirements.

Grants to employee directors and  officer/directors  can be either Non-Qualified
Stock Options or Incentive Stock Options,  to the extent that they do not exceed
the Incentive Stock Option exercise limitations, and the portion of an option to
an employee director or officer/director  that exceeds the dollar limitations of
Code Section 422 will be treated as a Non-Qualified Stock Option.

The Board  also may  construe  the Plan and the  provisions  in the  instruments
evidencing  options granted under the Plan to employee and officer  participants
and is empowered to make all other determinations  deemed necessary or advisable
for the  administration  of the Plan.  The Board may not  adversely  affect  the
rights of any  participant  under any  unexercised  option or any potion thereof
without the consent of such  participant.  This Plan will remain in effect until
it is  terminated  by the Board,  except that no Incentive  Stock Option will be
granted after December 15, 2009.

The Plan  contains  provisions  for  proportionate  adjustment  of the number of
shares for  outstanding  options and the option  price per share in the event of
stock dividends,  recapitalizations resulting in stock splits or combinations or
exchanges of shares.

Participants  in the  Plan may be  selected  by the  Board  from  employees  and
officers of the Company and its  subsidiaries and consultants to the Company and
its subsidiaries. In determining the persons to whom options will be granted and
the  number of shares to be  covered  by each  option,  the Board will take into
account  the duties of the  respective  persons,  their  present  and  potential
contributions to the success of the Company, and such other factors as the Board
deems relevant to accomplish the purposes of the Plan.


                                       21

<PAGE>



Only employees of the Company and its  subsidiaries,  as the term  "employee" is
defined for the  purposes of the Code,  and  consultants  to the Company will be
entitled to receive  Incentive  Stock Options.  Incentive  Stock Options granted
under the Plan are  intended to satisfy all  requirements  for  incentive  stock
options under Section 422 of the Code and the Treasury Regulations thereunder.

Each  option  granted  under the Plan  will be  evidenced  by a  written  option
agreement  between  the  Company  and the  optionee.  The  option  price  of any
Incentive  Stock  Option may be not less than 100% of the Fair Market  Value per
share on the date of grant of the option; provided,  however, that any Incentive
Stock Option  granted under the Plan to a person owning more than ten percent of
the total combined voting power of the common stock will have an option price of
not less  than 110% of the Fair  Market  Value per share on the date of grant of
the Incentive  Stock Option.  Each Non- Qualified Stock Option granted under the
Plan will be at a price no less than 85% of the Fair  Market  Value per share on
the date of grant thereof. "Fair Market Value" per share as of a particular date
is defined in the Plan as the last sale price of the  Company's  common stock as
reported on a national  securities exchange or on the NASDAQ System or, if none,
the average of the closing bid and asked prices of the Company's common stock as
reported by NASDAQ or, if such quotations are unavailable,  the value determined
by the Board in its discretion in good faith.

The exercise  period of options  granted under the Plan may not exceed ten years
from the date of grant  thereof.  Incentive  Stock  Options  granted to a person
owning more than ten percent of the total  combined  voting  power of the common
stock of the Company  will be for no more than five  years.  The Board will have
the  authority to  accelerate or extend the  exercisability  of any  outstanding
option at such time and under such  circumstances as it, in its sole discretion,
deems appropriate.  However,  no exercise period may be extended to increase the
term of the option beyond ten years from the date of the grant.

To exercise an option, the optionee must pay the full exercise price in cash, in
shares of common  stock  having a Fair Market Value equal to the option price or
in property or in a combination of cash,  shares,  and property and,  subject to
approval  of the  Board.  The  Board  has the sole and  absolute  discretion  to
determine whether or not property other than cash or common stock may be used to
purchase the shares of common  stock  thereunder  and, if so, to  determine  the
value of the property received.

An option may not be exercised unless the optionee then is an employee, officer,
or director  of the Company or its  subsidiaries,  and unless the  optionee  has
remained continuously as an employee,  officer, or director of the Company since
the date of grant of the  option.  If the  optionee  ceases  to be an  employee,
officer,  or director of the Company or its subsidiaries other than by reason of
death,  disability,  or for cause,  all options granted to such optionee,  fully
vested to such optionee but not yet exercised, will terminate three months after
the date the  optionee  ceases to be an  employee,  officer or  director  of the
Company.  All options which are not vested to an optionee,  under the conditions
stated in this paragraph for which employment ceases, will immediately terminate
on the date the optionee ceases employment or association.

If an optionee dies while an employee, officer or director of the Company, or if
the optionee's  employment,  officer, or director status terminates by reason of
disability,  all options  theretofore  granted to such optionee,  whether or not
otherwise exercisable, unless earlier terminated in accordance with their terms,
may be  exercised  at any  time  within  one  year  after  the  date of death or
disability of said optionee, by the optionee or by the optionee's estate or by a
person who acquired the right to exercise such options by bequest or inheritance
or otherwise by reason of the death or disability of the optionee.

Options granted under the Plan are not transferable other than by will or by the
laws of descent and distribution or pursuant to a qualified  domestic  relations
order  as  defined  by the  Code or Title I of the  Employee  Retirement  Income
Security Act of 1974, or the rules thereunder.  Options may be exercised, during
the lifetime of the optionee,  only by the optionee and  thereafter  only by his
legal representative. An optionee has no rights as a shareholder with respect to
any shares covered by an option until the option has been exercised.

As a condition  to the  issuance of shares upon the  exercise of an option,  the
Company will require the optionee to pay

                                       22

<PAGE>



to the Company the amount of the Company's tax withholding liability required in
connection with such exercise.  The Company, to the extent permitted or required
by law,  may  deduct a  sufficient  number of shares  due to the  optionee  upon
exercise of the option to allow the Company to pay such  withholding  taxes. The
Company is not  obligated to advise any optionee of the  existence of any tax or
the amount which the Company will be so required to withhold.

FEDERAL INCOME TAX CONSEQUENCES

The  federal  income tax  discussion  set forth  below is  included  for general
information only. Optionees are urged to consult their tax advisors to determine
the particular tax  consequences  applicable to them,  including the application
and effect of foreign, state, and local income and other tax laws.

INCENTIVE  STOCK OPTIONS.  No income results to the holder of an Incentive Stock
Option upon the grant thereof or issuance of shares upon exercise  thereof.  The
amount  realized on the sale or taxable  exchange of the Option Shares in excess
of the option exercise price will be considered a capital gain,  except that, if
a sale,  taxable  exchange,  or other  disposition  occurs within one year after
exercise  of the  Incentive  Stock  Option or two  years  after the grant of the
Incentive   Stock  Option   (generally   considered   to  be  a   "disqualifying
disposition"),  the optionee will realize  compensation,  for federal income tax
purposes,  on the amount by which the lesser of (i) the fair market value on the
date of exercise or (ii) the amount realized on the sale of the shares,  exceeds
the exercise price. Any appreciation on the shares between the exercise date and
the  disposition  will be taxed to the optionee as capital gain.  The difference
between the exercise  price and the fair market value of the shares  acquired at
the time of exercise is a tax preference item for the purpose of calculating the
alternative  minimum tax on individuals  under the Code. This preference  amount
will not be included again in alternative minimum taxable income in the year the
taxpayer disposes of the stock.

NON-QUALIFIED STOCK OPTIONS. No compensation will be realized by the optionee of
a Non-Qualified  Stock Option at the time it is granted.  Upon the exercise of a
Non-Qualified  Stock Option,  an optionee will realize  compensation for federal
income tax purposes on the  difference  between the exercise  price and the fair
market  value of the shares  acquired at the time of  exercise.  If the optionee
exercises a Non-Qualified  Stock Option by surrendering  shares of the Company's
common  stock,  the optionee  will not  recognize  income or gain at the time of
exercise.

CONSEQUENCES TO THE COMPANY.  The Company recognizes no deduction at the time of
grant or exercise of an Incentive  Stock Option and  recognizes  no deduction at
the time of grant of a Non-Qualified  Stock Option. The Company will recognize a
deduction  at the  time of  exercise  of a  Non-Qualified  Stock  Option  on the
difference  between the option  price and the fair market value of the shares on
the date of grant. The Company also will recognize a deduction to the extent the
optionee recognizes income upon a disqualifying disposition of shares underlying
an Incentive Stock Option.

VESTING

Unless otherwise specified in an optionee's agreement, options granted under the
Plan will become vested with the optionee over a two-year period, with one-sixth
of the options  vesting  every four  months,  in  addition to any other  vesting
requirements determined by the Board at the time of grant.

OPTION/SAR/LTIP AWARDS

Since its  inception,  the  Company has not  granted  any Stock  Options,  Stock
Appreciation Rights or Long Term Incentive Plan payouts.

EMPLOYMENT AGREEMENTS

None.



                                       23

<PAGE>

DIRECTORS' COMPENSATION

The Company does not  compensate  directors for services in their  capacities as
directors. The Company compensates directors for services in other capacities.

Mr. Bowes is paid a consulting fee of $6,000 per month.  During the period ended
December 31, 1999, the Company paid Mr. Bowes a total of $18,000 for services to
the Company and/or San Joaquin.

Chase Management Ltd., a private company indirectly wholly owned by Nick DeMare,
an officer and  director of the  Company,  provides  management  and  accounting
services to the Company and is compensated  for such services at its usual rate.
During the period ended  December  31,  1999,  the Company paid Chase a total of
$2,341 for services to the Company and/or San Joaquin.

Mr.  McNeil,  a director of the  Company,  provides  consulting  services to the
Company.  Mr.  McNeil  receives a  combination  of stock and cash in payment for
services as follows:

a.       Mr.  McNeil's  compensation  is paid one-half in the  Company's  stock,
         valued at the average of the bid and ask price of the Company's  common
         stock  during the month in which the services  are  performed,  and the
         remaining one-half in cash.

b.       If the  Company's  common  stock is not traded on an exchange or in the
         over-the-counter market, the value of common stock issued to Mr. McNeil
         will be the fair value of the shares,  as  determined  by the Company's
         Board of  Directors,  but such  value  shall  not be less than the last
         price at which shares were sold to investors.

During the period ended December 31, 1999, the Company, or San Joaquin, had paid
Mr. McNeil a total of $7,219 in cash and a further $7,220 remained unpaid and is
to be settled by the  issuance  of shares of common  stock of the  Company,  the
amount of which was still to be determined at April 10, 2000.


ITEM 11.          SECURITY   OWNERSHIP   OF   CERTAIN   BENEFICIAL   OWNERS  AND
                  MANAGEMENT.

The following table sets forth  information,  as of April 10, 2000, with respect
to the beneficial  ownership of the Company's  common stock by each person known
by the  Company  to be the  beneficial  owner of more than five  percent  of the
outstanding  common  stock and by directors  and  officers of the Company,  both
individually and as a group:


<TABLE>
<CAPTION>
                                                     AMOUNT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER                BENEFICIALLY OWNED          PERCENT OF CLASS

<S>                                                     <C>                          <C>
J. Timothy Bowes (1)<F1>                                1,533,000                    13.03%
53 Stratford Place, S.W.
Calgary, Alberta, Canada T3H 1H7

Nick DeMare (2)<F2>                                      135,000                     1.15%
Suite 1305, 1090 W. Georgia Street
Vancouver, British Columbia, Canada V6E
3V7

Colin McNeil                                                0                          --
340B, 630 - 6th Avenue, S.W.
Calgary, Alberta, Canada T2P 0S8

Officers and Directors as a group (3                    1,668,000                    14.17%
persons)


                                       24

<PAGE>


<FN>
<F1>
(1)      These  shares  are held of record by  Bowesco  Incorporated,  a company
         owned and controlled by Mr. Bowes.
<F2>
(2)      These shares are held of record by DNG Capital  Corp.,  a company owned
         and controlled by Mr. DeMare.
</FN>
</TABLE>


CHANGES OF CONTROL

As of the date of this annual  report,  there are no  arrangements  known to the
Company  which may at a  subsequent  date  result in a change of  control of the
Company.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Other than as  disclosed  below,  none of the  present  directors,  officers  or
principal  shareholders of the Company,  nor any family member of the foregoing,
nor, to the best of the information and belief of the present  management of the
Company, any of the former directors,  senior officers or principal shareholders
of the  Company,  nor any family  member of such former  directors,  officers or
principal  shareholders,  have or have had any  material  interest,  director or
indirect,  in any  transaction,  within the two years  prior to the date of this
report,  or in any proposed  transaction  which has materially  affected or will
materially affect the Company.  Management  believes the following  transactions
are as fair to the Company  and  similar to terms  which could be obtained  from
unrelated third parties.

1.       On  June  15,  1999,  Hilton  Petroleum  Ltd.,   indirectly  through  a
         subsidiary,  entered  into an  agreement  with  Berkley and  acquired a
         further net 4% capital  interest  (2.25%  working  interest) in the San
         Joaquin Joint Venture for $1,400,000. Hilton LLC used the proceeds from
         the sale of its membership units to purchase from Hilton Petroleum Ltd.
         a  2.25%  working  interest  in  the  San  Joaquin  Joint  Venture  for
         $1,550,000.  Hilton LLC is required to pay 4% of the costs to drill the
         initial wells on each of the initial three prospects in the San Joaquin
         Joint Venture, as discussed below. Hilton Petroleum Ltd. is the manager
         and  operator  of Hilton  LLC.  The Company  acquired  four  membership
         interests  in Hilton LLC for an  initial  purchase  price of  $390,000.
         Hilton LLC members,  including the Company,  are required to fund their
         pro-rata share of all the capital requirements of Hilton LLC. See "Item
         1. Description of Business."

         As  part  of the  acquisition  of the 4%  capital  interest  which  was
         subsequently  sold to Hilton LLC, Hilton  Petroleum Ltd. also acquired,
         as part of the $1,400,000  purchase  price,  an additional  0.7% (4% of
         17.5%) reversionary  interest in the East Lost Hills Joint Venture. The
         0.7% interest was not sold to Hilton LLC with the 4% capital interest.

         Mr.  Nick  DeMare,  an officer  and  director  of the  Company  and San
         Joaquin,  is also a director of Hilton  Petroleum  Ltd., the manager of
         Hilton  LLC.  However,  the terms upon which San Joaquin  acquired  its
         membership  interests  in Hilton LLC were the same as those  offered to
         non-affiliated purchasers.

2.       Chase  Management  Ltd., a private company  indirectly  wholly owned by
         Nick  DeMare,  an officer and  director of the  Company,  has  provides
         management  and  accounting  services to the Company and is compensated
         for such services at its usual rate.  During the period ended  December
         31, 1999,  the Company paid Chase a total of $2,341 for services to the
         Company and/or San Joaquin.

3.       Mr. McNeil, a director of the Company,  provides consulting services to
         the Company.  Mr. McNeil  receives a  combination  of stock and cash in
         payment for services as follows:

         a.       Mr.  McNeil's  compensation  is paid one-half in the Company's
                  stock,  valued at the  average of the bid and ask price of the
                  Company's  common stock during the month in which the services
                  are performed, and the remaining one-half in cash.

         b.       If the Company's  common stock is not traded on an exchange or
                  in the  over-the-counter  market,  the value of  common  stock
                  issued to Mr. McNeil will be the fair value of the shares,  as
                  determined by the Company's Board of Directors, but such value
                  shall not be less than the last price at which shares

                                       25

<PAGE>



                  were sold to investors.

         During the period ended December 31, 1999, the Company, or San Joaquin,
         had  paid Mr.  McNeil a total of  $7,219  in  cash,  a  further  $7,220
         remained  unpaid  and is to be  settled  by the  issuance  of shares of
         common  stock of the  Company,  the  amount  of which  was  still to be
         determined at April 10, 2000.

4.       During September 1999, Mr. Bowes and Mr. DeMare purchased shares of San
         Joaquin  Oil & Gas Ltd.  Series A  Convertible  Preferred  Stock  ("San
         Joaquin  Convertible  Preferred  Stock").  Mr. Bowes,  through  Bowesco
         Incorporated,  a company owned and  controlled by Mr. Bowes,  purchased
         15,330 shares of San Joaquin  Convertible  Preferred  Stock. Mr. DeMare
         purchased 1,350 shares of San Joaquin Convertible  Preferred Stock. Mr.
         Bowes and Mr. DeMare purchased their shares of San Joaquin  Convertible
         Preferred Stock at a price of $0.50 per share, which was the same price
         offered to non-affiliates.  During October 1999, all outstanding shares
         of San Joaquin  Convertible  Preferred Stock were converted into shares
         of San Joaquin Oil & Gas Ltd.  common  stock at the ratio of 100 shares
         of common  stock for each share of San  Joaquin  Convertible  Preferred
         Stock.  Subsequent to the conversion,  Mr. Bowes owned 1,533,000 shares
         of San Joaquin Oil & Gas Ltd. common stock and Mr. DeMare owned 135,000
         shares of San Joaquin Oil & Gas Ltd.  common  stock.  Mr. Bowes and Mr.
         DeMare  exchanged  their  shares of San Joaquin  Oil & Gas Ltd.  common
         stock for shares of the Company's  common stock in connection  with the
         share exchange with San Joaquin Oil & Gas Ltd.

5.       During the fiscal year ended  December 31, 1999, a related  entity paid
         expenses of $17,257 on behalf of the Company.  Upon consummation of the
         acquisition  of San Joaquin by the Company,  the related  entity waived
         payment of all amounts  that was owed to it by the  Company,  and since
         San  Joaquin  was the  accounting  acquirer,  the  December  31,  1999,
         financial statements were not affected by the transaction.

Mr. Bowes,  Mr. DeMare and Mr. McNeil are "founders" of the Company,  and except
as disclosed above,  have not received anything of value from the Company or its
subsidiary.



                                       26

<PAGE>



ITEM 13.                   EXHIBITS AND REPORTS ON FORM 8-K.

<TABLE>
(a)      Exhibits:

<CAPTION>
    REGULATION                                                                                              CONSECUTIVE
    S-B NUMBER                                         EXHIBIT                                              PAGE NUMBER
<S>                        <C>                                                                               <C>
       2.1                 Agreement and Plan of Reorganization (1)<F1>                                          N/A
       3.1                 Amended and Restated Articles of Incorporation (1)<F1>                                N/A
       3.2                 Bylaws (2)<F2>                                                                        N/A
       4.1                 1999 Stock Option Plan                                                                47
      10.1                 Operating Agreement of Hilton Petroleum Greater San Joaquin Basin Joint
                           Venture LLC                                                                           60
      10.2                 Consulting and Overriding Royalty Agreement with Davis & Namson                       75
      10.3                 Agreement with Canyon Oil                                                             104
      10.4                 Agreement with Consolidated Stewards Inc., as amended                                 115
       11                  Statement re: Computation of Per Share Earnings                                       See
                                                                                                              Financial
                                                                                                             Statements
       16                  Letter from Kish, Leake & Associates, P.C. (1)<F1>                                    N/A
       21                  List of Subsidiaries                                                                  128
       27                  Financial Data Schedule                                                               130

<FN>
<F1>
(1)      Incorporated by reference to the exhibits filed on the Company's Form 8-K dated December 31, 1999.
<F2>
(2)      Incorporated by reference to the exhibits filed on the Company's Form 10-SB dated July 23, 1999.
</FN>
</TABLE>

(b) The following  reports on Form 8-K were filed during the last quarter of the
period covered by this report:

         1.       Form 8-K dated December 31, 1999 reporting a change of control
                  under Item 1, the  acquisition  of assets  under Item 2, and a
                  change in the Company's  accountants  under Item 4,  including
                  Agreement  and Plan of  Reorganization,  Restated  and Amended
                  Articles of  Incorporation,  and a letter  from Kish,  Leake &
                  Associates, P.C.

                                       27

<PAGE>



                                   SIGNATURES

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

                                         SAN JOAQUIN RESOURCES INC.



Dated: April 14, 2000                    By:/s/J. TIMOTHY BOWES
                                               J. Timothy Bowes, President

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


<TABLE>
<CAPTION>
SIGNATURE                                            TITLE                                       DATE
<S>                                                  <C>                                         <C>
                                                     President and Director
                                                     (Principal Executive Officer)
/S/J. TIMOTHY BOWES                                                                              APRIL 14, 2000
J. Timothy Bowes
                                                     Secretary, Treasurer and Director
                                                     (Principal Financial and Accounting
/S/NICK DEMARE                                       Officer)                                    APRIL 14, 2000
Nick DeMare


/S/COLIN MCNEIL                                       Director                                   APRIL 14, 2000
Colin McNeil
</TABLE>


                                       28

<PAGE>


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




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)


                    CONSOLIDATED FINANCIAL STATEMENTS FOR THE
                   PERIOD FROM INCEPTION (SEPTEMBER 14, 1999)
                              TO DECEMBER 31, 1999



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





<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)



                                    I N D E X




Independent Auditor's Report                                          F-2

Consolidated Balance Sheet
     December 31, 1999                                                F-3

Consolidated Statement of Operations
     Period from inception (September 14, 1999) to December 31, 1999  F-4

Consolidated Statement of Stockholders' Equity
     Period from Inception (September 14, 1999) to December 31, 1999  F-5

Consolidated Statement of Cash Flows
     Period from Inception (September 14, 1999) to December 31, 1999  F-6 - F-7

Notes to Consolidated Financial Statements                            F-8 - F-17

























                                      F - 1


<PAGE>





                          INDEPENDENT AUDITOR'S REPORT




To The Board of Directors and Stockholders
San Joaquin Resources Inc. (Formerly LEK International, Inc.)

We have  audited  the  accompanying  consolidated  balance  sheet of San Joaquin
Resources  Inc. (a  development  stage  company) as of December 31, 1999 and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for the period from  inception  (September 14, 1999) to December 31, 1999.
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 audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of San
Joaquin  Resources Inc. as of December 31, 1999 and the consolidated  results of
its operations  and its cash flows for the period from inception  (September 14,
1999) to December 31, 1999 are in conformity with generally accepted  accounting
principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has  incurred  losses from its
initial  operations  and has not earned  revenues from its principal  operations
that raise  substantial  doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 2. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


                             /s/WHEELER WASOFF, P.C.

Denver, Colorado
April 4, 2000













                                      F - 2


<PAGE>




<TABLE>
                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999




<CAPTION>
                                                    A S S E T S
<S>                                                                                                <C>
CURRENT ASSETS
   Cash                                                                                              $     387,160
   Accounts receivable and prepaids                                                                          1,038
   Advance                                                                                                  10,000
   Total current assets                                                                                    398,198

INVESTMENT IN OIL AND GAS VENTURE (NOTE 4)                                                                 391,670
OI L & GAS PROPERTIES (NOTE 3)                                                                             122,590
                                                                                                   ----------------
                                                                                                     $     912,458
                                                                                                   ================


<CAPTION>
                           L I A B I L I T I E S & S T O C K H O L D E R S' E Q U I T Y


<S>                                                                                                <C>
CURRENT LIABILITIES
   Accounts payable and accrued liabilities (Note 6)                                                 $      74,163
                                                                                                   ----------------
   Total current liabilities                                                                                74,163
                                                                                                   ----------------

COMMITMENTS AND CONTINGENCIES (NOTES 4 AND 9)

STOCKHOLDERS' EQUITY (NOTE 5)
   Common stock, $0.0001 par value
     Authorized - 1,000,000,000 shares
     Issued and outstanding - 11,769,000 shares                                                              1,177
   Additional paid-in capital                                                                              984,722
  (Deficit) accumulated during the development stage                                                      (147,604)
                                                                                                   ----------------
                                                                                                           838,295
                                                                                                   ----------------
                                                                                                     $     912,458
                                                                                                   ================
</TABLE>




    The accompanying notes are an integral part of these financial statements

                                      F - 3



<PAGE>




<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999





<S>                                                                                               <C>
REVENUE
     Interest                                                                                       $       5,784
                                                                                                  ----------------

OPERATING EXPENSES
     Administration and accounting                                                                          2,341
     Audit and legal                                                                                       21,148
     Filing                                                                                                   283
     Office and miscellaneous                                                                               2,712
     Professional fees                                                                                     95,362
     Travel                                                                                                33,212
                                                                                                  ----------------
                                                                                                          155,058
                                                                                                  ----------------
(LOSS) FROM OPERATIONS                                                                                   (149,274)
EQUITY IN INCOME OF AFFILIATE                                                                               1,670
                                                                                                  ----------------
NET (LOSS)                                                                                          $    (147,604)
                                                                                                  ================

NET (LOSS) PER COMMON SHARE - BASIC
     AND DILUTED                                                                                    $      (0. 03)
                                                                                                  ================
WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING - BASIC AND DILUTED                                                             5,874,429
                                                                                                  ================
</TABLE>











    The accompanying notes are an integral part of these financial statements


                                      F - 4



<PAGE>




<TABLE>
                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999




<CAPTION>

                                                                                                                       (DEFICIT)
                                         PREFERRED STOCK                   COMMON STOCK                               ACCUMULATED
                                   ---------------------------     ----------------------------      ADDITIONAL       DURING THE
                                                                                                      PAID-IN        DEVELOPMENTAL
                                     SHARES          AMOUNT           SHARES          AMOUNT          CAPITAL            STAGE
                                   ----------     ------------     ------------     -----------     ------------    ---------------
<S>                                <C>            <C>              <C>              <C>             <C>             <C>
Inception, September 14, 1999            -         $      -                -         $     -         $      -         $        -

Sale of Series A Preferred
Shares at $0.50 per  share            61,490              615              -               -             30,130                -

Conversion of Series A
Preferred Shares into                (61,490)            (615)       6,149,000           6,149           (5,534)               -
common stock

Sale of common stock at
$0.50 per  share                         -                -          1,920,000           1,920          958,080                -

Costs of offerings                       -                -                -               -             (4,846)               -

Issuance of common stock for
acquisition of San Joaquin               -                -                -            (7,262)           7,262                -

Recapitalization of shares
issued by LEK prior to merger            -                -          3,700,000             370             (370)               -

Net (loss)                               -                -                -               -                -             (147,604)
                                   ----------     ------------     ------------     -----------     ------------    ---------------
Balance, December 31, 1999               -         $      -         11,769,000       $   1,177       $  984,722       $   (147,604)
                                   ==========     ============     ============     ===========     ============    ===============
</TABLE>


















    The accompanying notes are an integral part of these financial statements


                                      F - 5



<PAGE>




<TABLE>
<CAPTION>
                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


<S>                                                                                               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net (loss) for the period                                                                   $   (147,604)
      Adjustments to reconcile net (loss) to net cash (used)
           by operating activities
      Equity in income of affiliate                                                                     (1,670)
      Changes in assets and liabilities
           Increase in amounts receivable and prepaids                                                  (1,038)
           Increase in advance                                                                         (10,000)
           Increase in accounts payable and accrued liabilities                                         74,163
                                                                                                 --------------
      Net cash (used) by operating activities                                                          (86,149)
                                                                                                 --------------

CASH FLOWS FROM  INVESTING ACTIVITIES
      Investment in oil and gas venture                                                               (390,000)
      Additions to oil and gas properties                                                             (192,590)
      Proceeds from sale of participation agreement                                                     70,000
                                                                                                 --------------
      Net cash (used) by investing activities                                                         (512,590)
                                                                                                 --------------

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from sale of preferred stock                                                             30,745
      Proceeds from sale of common stock                                                               960,000
      Cash paid for offering costs                                                                      (4,846)
                                                                                                 --------------

      Net cash provided by financing activities                                                        985,899
                                                                                                 --------------

NET INCREASE IN CASH                                                                                   387,160

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

CASH - END OF PERIOD                                                                              $    387,160
                                                                                                 ==============
</TABLE>









    The accompanying notes are an integral part of these financial statements

                                      F - 6




<PAGE>





                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

During the period from inception to December 31, 1999, the Company did not incur
any short-term borrowings.


SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES

In October 1999,  6,149,000 shares of common stock of San Joaquin Oil & Gas Ltd.
were issued on the conversion of 61,490 Series A Preferred Shares.

In  December  1999,  8,069,000  shares  of  common  stock  were  issued  for the
acquisition  of 100% of the  outstanding  common  stock of San Joaquin Oil & Gas
Ltd.   These  shares  were  issued   pursuant  to  an  agreement   and  plan  of
reorganization effective December 31, 1999. (Note 1)































    The accompanying notes are an integral part of these financial statements

                                      F - 7



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


1.       ORGANIZATION AND BUSINESS COMBINATION

         LEK International,  Inc. ("LEK") was incorporated under the laws of the
         State of Nevada on April  21,  1997,  for the  purpose  of  evaluating,
         structuring  and  completion of a merger with, or acquiring a privately
         owned corporation.  LEK is a public company which had no operations. On
         December 31, 1999, LEK completed an agreement (the  "Agreement and Plan
         of  Reorganization")  whereby it issued  8,069,000 shares of its common
         stock to acquire all of the shares of San Joaquin Oil & Gas Ltd.  ("San
         Joaquin"),  a private  corporation  incorporated on September 14, 1999,
         under the laws of the State of Nevada.  San  Joaquin is an  independent
         energy company engaged in the exploration,  development and acquisition
         of crude oil and natural gas reserves in the western  United States and
         is  considered a  development  stage company as defined by Statement of
         Financial  Accounting  Standards  (SFAS)  No.  7.  San  Joaquin  is  an
         exploration  stage oil and gas company and as of December 31, 1999, has
         not earned any production revenue, nor found proved resources on any of
         its properties.  San Joaquin's  principal  activities have been raising
         capital through the sale of its securities,  identifying and evaluating
         potential oil and gas property acquisitions,  and acquiring an interest
         in a limited liability company. See Notes 3 and 4.

         As a result of this  transaction,  San  Joaquin  became a  wholly-owned
         subsidiary of LEK, and effective January 17, 2000, LEK changed its name
         to San Joaquin  Resources Inc. (the "Company").  Since this transaction
         resulted in the former shareholders of San Joaquin acquiring control of
         LEK, for  financial  reporting  purposes the business  combination  was
         accounted  for  as an  additional  capitalization  of  LEK  (a  reverse
         acquisition  with  San  Joaquin  as  the  accounting   acquirer).   The
         operations of San Joaquin will be the only continuing operations of the
         Company. In accounting for this transaction:

         i)      San Joaquin was deemed to be the purchaser  and parent  company
                 for financial reporting purposes.  Accordingly,  its net assets
                 were  included  in the  consolidated  balance  sheet  at  their
                 historical book value;

         ii)     control  of the net  assets and  business  of LEK was  acquired
                 effective December 31, 1999, for no consideration; and

         iii)    the   consolidated    financial   statements   of   operations,
                 stockholders'  equity  and  cash  flow  include  San  Joaquin's
                 results of  operations  and changes in cash flow for the period
                 from inception, September 14, 1999, to December 31, 1999.

         The Company's fiscal year end is December 31.







                                      F - 8



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF ACCOUNTING

         The accompanying  financial  statements have been prepared on the basis
         of  accounting  principles   applicable  to  a  going  concern,   which
         contemplates   the   realization  of  assets  and   extinguishment   of
         liabilities in the normal course of business.

         The Company is in the development  stage and has not realized  revenues
         from its planned  operations.  Additional  funding  will be required to
         complete the Company's planned funding contributions in its investment,
         participate  in  the   acquisition,   exploration  and  development  of
         interests  in oil and gas  properties.  In order to meet the  Company's
         continuing financing needs,  management of the Company intends to raise
         working capital  through the sale of common stock or other  securities,
         or through other financing.

         The  Company's  financial  statements  do not include  any  adjustments
         related  to the  realization  of the  carrying  value of  assets or the
         amounts  and  classification  of  liabilities  that might be  necessary
         should the Company be unable to continue in existence.

         The ability of the Company to continue operations as a going concern is
         dependent upon its success in obtaining  capital through sale of common
         stock  or  other   securities  and  ultimately   achieving   profitable
         operations.

         BASIS OF CONSOLIDATION

         The  consolidated  financial  statements  include  the  accounts of the
         Company and its wholly-owned  subsidiary,  San Joaquin. All significant
         intercompany   accounts  and  transactions   have  been  eliminated  in
         consolidation.

         OIL AND GAS PROPERTIES

         CAPITALIZED COSTS

         The Company  follows the full cost method of accounting for oil and gas
         operations.  Under this method all costs related to the exploration for
         and   development  of  oil  and  gas  reserves  are  capitalized  on  a
         country-by-country   basis.  Costs  include  lease  acquisition  costs,
         geological  and  geophysical  expenses,  overhead  directly  related to
         exploration  and  development  activities  and costs of  drilling  both
         productive  and  non-productive   wells.  Proceeds  from  the  sale  of
         properties are applied against  capitalized costs,  without any gain or
         loss being recognized, unless such a sale would significantly alter the
         rate of depletion and depreciation.


                                      F - 9



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         DEPLETION AND DEPRECIATION

         Depletion of exploration  and  development  costs and  depreciation  of
         production  equipment is provided using the  unit-of-production  method
         based  upon  estimated  proven  oil  and gas  reserves.  The  costs  of
         significant  unevaluated  properties are excluded from costs subject to
         depletion. For depletion and depreciation purposes, relative volumes of
         oil and  gas  production  and  reserves  are  converted  at the  energy
         equivalent conversion rate of six thousand cubic feet of natural gas to
         one barrel of crude oil.

         CEILING TEST

         In applying the full cost method,  the Company  performs a ceiling test
         whereby the carrying  value of oil and gas  properties  and  production
         equipment,  net of recorded  future  income  taxes and the  accumulated
         provision  for site  restoration  and  abandonment  costs,  is compared
         annually to an estimate of future net cash flow from the  production of
         proven  reserves.  Costs related to undeveloped  oil and gas properties
         are  excluded  from the  ceiling  tests.  Discounted  net cash  flow is
         estimated  using year end prices,  less  estimated  future  general and
         administrative expenses,  financing costs and income taxes. Should this
         comparison  indicate an excess  carrying  value,  the excess is charged
         against earnings. At December 31, 1999 there were no reserves.

         INVESTMENTS

         Investments in affiliated  companies (20% to 50% owned),  are accounted
         for by the equity method. Under this method, the Company recognizes its
         share of income (loss) in the investee  company.  Where, in the opinion
         of management, there has been a loss in value of long-term investments,
         which is other than a temporary decline,  the carrying value is reduced
         to estimated realizable value.

         REVENUE RECOGNITION

         The Company will  recognize  oil and gas revenues from its interests in
         producing wells as oil and gas is produced and sold from these wells.

         IMPAIRMENT

         The Company has adopted SFAS No. 121  "Accounting for the Impairment of
         Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of" which
         requires  that  long-lived  assets to be held and used be reviewed  for
         impairment  whenever events or changes in  circumstances  indicate that
         the  carrying  amount of an asset may not be  recoverable.  Oil and gas
         properties  accounted for using the full cost method of  accounting,  a
         method utilized by the Company, are excluded from this requirement, but
         will continue to be subject to the ceiling test limitations.


                                      F-10



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         INCOME TAXES

         The Company has adopted the provisions of SFAS No. 109, "Accounting for
         Income   Taxes".   SFAS  109  requires   recognition  of  deferred  tax
         liabilities  and assets for the  expected  future tax  consequences  of
         events  that have been  included  in the  financial  statements  or tax
         returns.  Under this method,  deferred tax  liabilities  and assets are
         determined based on the difference between the financial  statement and
         tax basis of assets and  liabilities  using enacted tax rates in effect
         for the year in which the differences are expected to reverse.

         At December 31, 1999, the Company had a net operating loss carryforward
         of  approximately  $253,000 that may be offset  against  future taxable
         income through 2019.

         The  Company has fully  reserved  the tax  benefits of these  operating
         losses because the likelihood of realization of the tax benefits cannot
         be determined.

         The tax benefit of the loss  carryforward of $38,000 has been offset by
         a valuation allowance of the same amount.

         Temporary  differences  between the time of reporting certain items for
         financial and tax reporting  purposes consist  primarily of exploration
         costs on oil and gas properties, and equity income (loss) in affiliated
         companies.

         USE OF ESTIMATES

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

         The oil and gas industry is subject,  by its nature,  to  environmental
         hazards  and  clean-up  costs.  At this  time,  management  knows of no
         substantial costs from  environmental  accidents or events for which it
         may be  currently  liable.  In  addition,  the  Company's  oil  and gas
         business makes it vulnerable to changes in wellhead prices of crude oil
         and natural gas.  Such prices have been volatile in the past and can be
         expected to be volatile in the future.  By definition,  proved reserves
         are based on current oil and gas prices and estimated  reserves.  Price
         declines reduce the estimated  quantity of proved reserves and increase
         annual amortization expense (which is based on proved reserves).



                                     F - 11



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         FOREIGN CURRENCY TRANSLATION

         The assets and  liabilities  of the Company's  foreign  operations  are
         generally  translated into US dollars at current  exchange  rates,  and
         revenues and expenses are translated at average  exchange rates for the
         year.  Resulting  translation  adjustments,  if any, are reflected as a
         separate component of stockholders' equity.

         Transaction gains and losses that arise from exchange rate fluctuations
         on  transactions  denominated  in a currency  other than the functional
         currency are included in the results of operations as incurred.

         (LOSS) PER COMMON SHARE

         (Loss) per  common  share is  computed  based on the  weighted  average
         number of common shares  outstanding  during the period.  Common shares
         issued upon conversion of Series A convertible preferred stock (Note 4)
         are considered outstanding for all periods presented.

         CASH EQUIVALENTS

         For purposes of  reporting  cash flows,  the Company  considers as cash
         equivalents  all highly  liquid  investments  with a maturity  of three
         months or less at the time of purchase.  On  occasion,  the Company has
         cash in banks in excess of federally insured amounts.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments,   which  potentially  subject  the  Company  to
         concentrations  of credit risk,  consist of cash. The Company maintains
         cash accounts at one financial  institution.  The Company  periodically
         evaluates  the  credit  worthiness  of  financial   institutions,   and
         maintains   cash  accounts   only  in  large  high  quality   financial
         institutions.

         FAIR VALUE

         The carrying  amount  reported in the balance sheet for cash,  accounts
         receivable  and  prepaids,   advances,  accounts  payable  and  accrued
         liabilities  approximates  fair  value  because  of  the  immediate  or
         short-term maturity of these financial instruments.






                                     F - 12



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         NEW TECHNICAL PRONOUNCEMENTS

         In June 1998 SFAS No. 133  "Accounting  for Derivative  Instruments and
         Hedging  Activities"  was issued for fiscal years  beginning after June
         15,  1999.  Adoption  of SFAS No.  133 does not have an  impact  on the
         Company's financial statements.

         In  October  1998  SFAS  No.  134   "Accounting   for  Mortgage  Broker
         Securities"  was issued for fiscal years  beginning  after December 15,
         1998. Adoption of SFAS No. 134 does not have an impact on the Company's
         financial statements.

         In February 1999 SFAS No. 135  "Rescission of FASB Statement No. 75 and
         Technical  Corrections"  was issued for fiscal  years  beginning  after
         February 15, 1999.  Adoption of SFAS No. 135 does not have an impact on
         the Company's financial statements.

         In June 1999 SFAS No. 137  "Accounting  for Derivative  Instruments and
         Hedging  Activities - Deferral of the Effective Date of FASB Statements
         No. 133" was issued.  Adoption of SFAS No. 137 is not  expected to have
         an impact on the Company's financial statements.


3.       OIL & GAS PROPERTIES

         Pursuant to an agreement,  dated  November 16, 1999, the Company agreed
         to grant  Consolidated  Earth  Stewards  Inc.  ("CEW") a right to first
         refusal  ("ROFR") until October 1, 2001 to participate in a 19% working
         interest in certain oil and gas prospects to be  identified,  acquired,
         or generated by the Company in the San Joaquin and  Sacramento  Basins,
         located in  California.  CEW had agreed to pay an initial  $150,000 for
         the ROFR and provide an initial advance of $200,000 to fund exploration
         costs.  As at December 31, 1999, CEW had paid the Company  $70,000.  By
         agreement  dated  February 8, 2000,  CEW paid a further  $8,000 and the
         Company  and CEW  agreed to  suspend  the  agreement,  and any  further
         obligations of CEW, pending a review of developments in the San Joaquin
         and Sacramento Basins.

         On  December  1, 1999,  the  Company  and  Canyon Oil & Gas  ("Canyon")
         entered into an agreement  whereby the Company paid an initial  $70,000
         to Canyon for technical  information  provided by Canyon on certain oil
         and gas prospects (the "Canyon  Prospects")  located in the San Joaquin
         and  Sacramento  Basins.  The Company is also required to pay a renewal
         payment of $70,000 every four months until termination of the agreement
         by either party.  The Company has not made the $70,000  renewal payment
         which was due on April 1, 2000 and is  attempting  to  renegotiate  the
         terms  of the  agreement.  Canyon  will  retain a 14%  carried  working
         interest  in any of the  Canyon  Prospects  which are  acquired  by the
         Company.


                                     F - 13



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


3.       OIL & GAS PROPERTIES (continued)

         Oil and gas properties at December 31, 1999, consist of exploration and
         geological and geophysical costs on specific prospective properties and
         areas of  interest.  As at  December  31,  1999,  the  Company  has not
         acquired any direct interests in oil and gas properties.


4.       INVESTMENT IN OIL AND GAS VENTURE

         During the period ended December 31, 1999,  the Company  purchased four
         units,  representing  a 20%  ownership  interest,  in Hilton  Petroleum
         Greater San Joaquin Basin LLC ("Hilton LLC") for $390,000.  Hilton LLC,
         a Colorado limited  liability  company  organized on June 4, 1999, is a
         development  stage company as defined by SFAS No. 7. As of December 31,
         1999, Hilton LLC has paid Hilton Petroleum Ltd.  ("Hilton")  $1,550,000
         for a 2.25% working  interest in the San Joaquin Joint Venture and will
         pay 4% of the costs to drill the  initial  wells on each of the initial
         three prospects in the San Joaquin Basin.

         As a member of Hilton LLC,  the Company will be required to provide its
         pro-rata share of all capital  requirements of Hilton LLC. In the event
         that  a  member  fails  to  pay  its   additional   cash  call  capital
         contributions  within a specified time period,  then,  that  defaulting
         member's  interest in Hilton LLC shall revert to Hilton. If the default
         occurs within 24 months of the initial capital  contribution the member
         will, no sooner than 12 months, if the default occurs before 12 months,
         receive common stock of Hilton, at the then prevailing  prices, for the
         defaulting  member's  investment  cost. If such failure occurs after 24
         months,  then  Hilton  will  fund  the  capital   contribution  of  the
         defaulting  member and retain  that  member's  share of cash flow until
         300% of the defaulted cash is repaid to Hilton.

         Hilton is the  manager of Hilton LLC. A director of the Company is also
         a director of Hilton.

         The  Company's  investment  in Hilton  LLC is  accounted  for using the
         equity  method.  Equity  income  in  Hilton  LLC for the  period  ended
         December   31,  1999  was  $1,670.   Summarized   unaudited   financial
         information of Hilton LLC, as of December 31, 1999, is as follows:

                         Cash                       $      7,193

                         Oil and gas properties        2,036,706
                                                   --------------
                         Total assets               $  2,043,899
                                                   ==============
                         Accounts payable           $     95,297
                                                   ==============
                         Members' equity            $  1,948,602
                                                   ==============
                         Net income                 $      8,352
                                                   ==============

                                     F - 14



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


4.       INVESTMENT IN OIL AND GAS VENTURE (continued)

         On April 4, 2000,  the Company  notified  Hilton and Hilton LLC that it
         would no longer fund any further  capital  contributions.  Accordingly,
         the Company will receive common shares of Hilton,  based on the trading
         value price of Hilton common  stock,  in an amount equal to its capital
         contributions.  Hilton  is a  Canadian  public  company  listed  on the
         Canadian  Venture  Exchange and is engaged in the business of acquiring
         leasehold  interests in oil and gas properties and the exploration for,
         and development,  production and sale of oil and gas,  predominantly in
         the United States through its wholly owned subsidiaries.


5.       STOCKHOLDERS' EQUITY

         Effective  December 31, 1999,  LEK  completed  the  acquisition  of San
         Joaquin (Note 1). In conjunction  with the  acquisition,  LEK exchanged
         8,069,000 shares of its common stock for 100% of the outstanding common
         shares of San  Joaquin.  The  3,700,000  shares of common  stock of LEK
         outstanding at the date of acquisition  were  recapitalized  at the net
         assets  value of LEK as of that  date of $0.  For  financial  statement
         reporting   purposes  this   transaction   was  treated  as  a  reverse
         acquisition  whereby San  Joaquin  was  considered  the  surviving  and
         reporting  entity.  For legal  purposes,  LEK remained as the surviving
         entity; therefore, the capital structure of the Company was accordingly
         restated.  In December 1999, the Board of Directors and shareholders of
         LEK  approved  a 3.7  to 1  stock  split.  All  common  shares  of  LEK
         outstanding   prior  to  the  acquisition  of  San  Joaquin  have  been
         retroactively restated.

         In  September  1999,  San  Joaquin  designated  70,000  shares  of  its
         1,000,000 authorized preferred stock, as Series A convertible preferred
         stock (the "Series A Preferred Shares").  San Joaquin subsequently sold
         61,490 Series A Preferred Shares, at $0.50 per share, for cash proceeds
         of  $30,745.  In October  1999,  the  Series A  Preferred  Shares  were
         converted by the holders into 6,149,000 common shares of San Joaquin.

         In October  1999,  San Joaquin  completed  the sale of an  aggregate of
         1,920,000 shares of common stock, at a price of $0.50 per common share,
         for cash  proceeds of  $960,000.  The shares of common  stock were sold
         pursuant to the exemption from registration  contained in Sections 3(b)
         and 4(2) of the  Securities  Act of 1933 and Rule 504 of  Regulation  D
         promulgation thereunder.

         The cost of San Joaquin's  preferred and common stock  offerings was an
         aggregate $4,846.







                                     F - 15



<PAGE>




                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


5.       STOCKHOLDER'S EQUITY (continued)

         On December 15, 1999,  the Board of Directors of LEK approved,  subject
         to completion of the Agreement and Plan of  Reorganization  between LEK
         and San Joaquin,  a stock option plan (the "Plan"),  which  reserved an
         aggregate of 1,176,900 shares of common stock for issuance  pursuant to
         the  exercise  of stock  options  which may be  granted  to  employees,
         officers and directors of the Company and  consultants  to the Company.
         The Plan also provides for annual  adjustments  in the number of shares
         available  under  the  Plan  equal  to  10%  of the  number  of  shares
         outstanding.  No stock  options have been granted  under the Plan.  The
         Company will measure  compensation for options  utilizing the intrinsic
         value approach under Accounting Principles Board Opinion No. 25.


6.       RELATED PARTY TRANSACTIONS

         During the period  ended  December  31,  1999,  the Company was charged
         $2,341  for  accounting  services  rendered  by a  company  owned  by a
         director of the Company,  $18,000 for professional fees rendered by the
         President  of  the  Company,   and  $14,439  for  services  related  to
         exploration of oil and gas properties by a director of the Company.  At
         December 31, 1999,  $11,016  remained  unpaid and has been  included in
         accounts payable and accrued liabilities.

         See also Note 4.


7.       SEGMENT REPORTING

         The Company has one reportable segment, the exploration and development
         of oil and gas properties. The Company has concentrated its oil and gas
         exploration  and  development  activities in the western United States,
         primarily  California.  All  activities  in this segment have been with
         industry  partners and have been  substantially  conducted  through the
         Company's investment in Hilton LLC.


8.       COMPREHENSIVE INCOME

         There are no  adjustments  necessary  to the net (loss) as presented in
         the accompanying statement of operations to derive comprehensive income
         in accordance with SFAS No. 130, "Reporting Comprehensive Income".





                                     F - 16



<PAGE>



                           SAN JOAQUIN RESOURCES INC.
                       (FORMERLY LEK INTERNATIONAL, INC.)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE PERIOD FROM INCEPTION
                    (SEPTEMBER 14, 1999) TO DECEMBER 31, 1999


9.       COMMITMENTS AND CONTINGENCIES

         The Company may be subject to various possible  contingencies which are
         derived  primarily from  interpretations  of federal and state laws and
         regulations  affecting  the oil and gas industry.  Although  management
         believes it has  complied  with the various laws and  regulations,  new
         rulings  and  interpretations  may  require  the Company to make future
         adjustments.


10.      SUBSEQUENT EVENTS

         Effective  January 17,  2000,  the Company  amended  and  restated  its
         Articles  of  Incorporation  to  authorize   additional  capital  stock
         consisting of 5,000,000 shares of Preferred Stock with $0.001 par value
         per share and changed the name of the Company to San Joaquin  Resources
         Inc.

         Also see Note 4.



























                                     F - 17




<PAGE>