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                                 UNITED STATES
                       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


                  For the fiscal year ended December 31, 1999

                        Commission File Number 000-27203

                        CANADIAN NORTHERN LITES, INC.

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

             (Exact name of registrant as specified in its charter)


                Texas, USA                         76-048710
                ----------                         ---------
        State or other Jurisdiction       (IRS Employer Identification No.)
        of Incorporation or Organization

       Suite U13 Broadway Plaza, 601 W. Broadway, Vancouver, B.C. V5Z 4C2
       ------------------------------------------------------------------
                    (Address of principal executive offices)

                    Issuer's Telephone Number, (604) 879-9001


    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:

                          COMMON STOCK ($.001 PAR VALUE)
                                (Title of Class)

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

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

      The issuer's revenues for its most recent fiscal year were $0.

      The aggregate market value of the voting stock held by non-affiliates of
the issuer as of December 31, 1999, was approximately $77,625.

      The number of shares of the common stock of the issuer outstanding as of
December 31, 1999, was 17,211,000.


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


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                                TABLE OF CONTENTS


                                                                          Page
                                                                          ----
PART I   ...............................................................     1

     ITEM 1  DESCRIPTION OF BUSINESS....................................     1
     ITEM 2  DESCRIPTION OF PROPERTY....................................     7
     ITEM 3  LEGAL PROCEEDINGS..........................................    14
     ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........    14

PART II  ...............................................................    14

     ITEM 5  MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON
             EQUITY AND RELATED SHAREHOLDER MATTERS.....................    14
     ITEM 6  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..    15
     ITEM 7  FINANCIAL STATEMENTS.......................................    22
     ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE........................    42

PART III ...............................................................    42

     ITEM 9  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
             PERSONS....................................................    42
     ITEM 10 EXECUTIVE COMPENSATION.....................................    44
     ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT.................................................    44
     ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............    45
     ITEM 13 EXHIBITS, AND REPORTS ON FORM 8-K..........................    45

SIGNATURES .............................................................    45


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------

INTRODUCTION

Canadian Northern Lites Inc. (hereinafter also referred to as the "Company"
and/or the "Registrant") is a Company that was formed to explore properties
located in Canada for the presence of gemstones. The Company has interests in
four properties which it may, in the future, explore. Currently, these four
properties are in a dormant status. The four interests consist of a 20% joint
venture interest in the Ewer/Klinker Mineral Properties located near the town of
Vernon, British Columbia and a 100% interest in each of the Way 1, Banjo I and
Banjo II Mineral Properties also located near the town of Vernon, British
Columbia.

None of the Company's properties contain a known commercially viable deposit
suitable for mining.

The Company is voluntarily filing its registration statement on Form 10-SB in
order to make information concerning itself more readily available to the
public. As a result of filing its registration statement, the Company is
obligated to file with the Commission certain interim and periodic reports
including an annual report containing audited financial statements. The Company
intends to continue to voluntarily file these periodic reports under the
Exchange Act even if its obligation to file such reports is suspended under
applicable provisions of the Exchange Act.

The Company's principal office is located at Suite U-13 Broadway Plaza, 601 West
Broadway, Vancouver, British Columbia V5Z 4C2. The contact person is Mr. Terry
G. Cook, President and a member of the Board of Directors. The telephone number
is (604) 879-9001; the facsimile number is (604) 879-9004. The Company currently
does not maintain a website.

The Company's authorized capital includes 100,000,000 shares of common stock
with $0.001 par value. As of the close of the Company's latest fiscal year,
December 31, 1999, there were 17,211,000 shares of common stock outstanding.

The Company's common stock trades on the National Quotation Bureau's Electronic
Pink Sheets with the symbol "CANL".

The information in this Registration Statement is current as of March 15, 2000,
unless otherwise indicated.


HISTORICAL CORPORATE DEVELOPMENT

The Company was incorporated in the state of Nevada on June 18, 1990 as QQQ
Huntor Associates, Inc. On July 21, 1995, the Company changed its domicile to
the state of Texas and merged into a Texas corporation called Unimex
Transnational Consultants, Inc. On April 26, 1996, the Company reorganized and
acquired all the issued and outstanding stock of Dakota Mining & Exploration
Ltd.("Dakota") for total compensation of 10,000,000 shares of the Company's
common stock. At this time the name of the Company was changed to Canadian
Northern Lites, Inc. As a result of that transaction, Dakota became a wholly
owned subsidiary of the Company.


                                       1


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As a result of the transaction in which the Company acquired all the outstanding
shares of Dakota, the group of shareholders that owned Dakota held 10,000,000
shares of the Company which was more than 50% of the voting shares at that time.
This resulted in the transaction being accounted for as a "reverse take-over" in
the consolidated financial statements.

On April 10, 1996, the Company entered into an agreement which was an Option To
Purchase some mineral claims (Ewer/Klinker Mineral Properties) located near
Vernon, British Columbia. This agreement originally gave the Company an option
to acquire a 100% interest in the claims, but that option expired unexercised on
January 15, 1998 and at that time a joint venture was created in which the
Company had a 20% interest. The activities of the joint venture are to be
controlled by a management committee and each joint venture partner is required
to advance funds for property development. To date, the management committee has
not been formed and the activities of the joint venture have not begun. As of
August 25, 1999, the Company is not aware of any financial commitments to the
joint venture under the direction of the management committee or a date at which
time any such commitments may start.

On May 5, 1998, the Company acquired a 100% interest in the Way I Claim; the
Banjo I Claim; and, the Banjo II Claim for total consideration of $50,000 from
456786 B.C. Ltd., a company controlled by Terry G. Cook, the President of the
Company. In addition the principal of the note payable was reduced by the
significant shareholder from $50,000 to $24,841, being the cost of the property
to the significant shareholder.

All of the Company's mineral properties are currently in a dormant status.


BUSINESS

The Company currently has a 100% interest in three mineral properties that it
believes may be suitable for gemstone exploration. The Company currently has no
immediate plans to begin exploration programs on any of these properties.

The Company also has a 20% joint venture interest in some mineral claims located
near Vernon, British Columbia. To date no significant activities of the joint
venture have begun.


RISK FACTORS

The Uncertainty of the Degree of Success of Possible Future  Exploration Efforts
By the Company:

The Company's properties are currently in a dormant stage. It is still uncertain
whether or not the property contains a mineable quantity of gemstones.
Development of the Company's properties will only follow upon obtaining
satisfactory exploration results. Gemstone exploration involves a high degree of
risk and few properties that are explored are ultimately developed into
producing mines. There is no assurance that the Company's future mineral
exploration and development activities will result in any discoveries of
gemstones. The long-term profitability of the Company's operations will be in
part directly related to the cost and success of its future exploration
programs, which may be affected by a number of factors.


                                       2


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The Company's gemstone operations will be subject to governmental legislation,
policies and controls relating to prospecting, development, production and
environmental protection, mining taxes and labor standards. Other factors, such
as market fluctuations, changing production costs, the supply and demand for
gemstones, the rate of inflation, the political environment and changes in
international investment patterns may have an adverse affect on the Company's
operations.


THE LACK OF ASSURANCE THAT THE COMPANY WILL BE ABLE TO MEET ITS FUTURE CAPITAL
REQUIREMENTS

The Company has no source of operating cash flow to fund future exploration
projects or corporate overhead. The Company has limited financial resources, and
there is no assurance that additional funding will be available. The Company's
ability to continue exploration of its properties will be dependent upon its
ability to raise significant additional funds in the future.


The Company has no history of earnings, and due to the nature of its
business, there can be no assurance that the Company will be profitable. The
Company has paid no dividends on its common shares since incorporation and does
not anticipate doing so in the foreseeable future. The only source of funds
available to the Company for future exploration expenditures is through the sale
of its equity shares. Even if the results of future exploration are encouraging,
the Company may not have sufficient funds to conduct the further exploration
that may be necessary to determine whether or not a commercially mineable
deposit exists. While the Company may generate additional working capital
through further equity offerings or through the sale or possible syndication of
one or more of its properties, there is no assurance that such funds will be
available. If available, future equity financing may result in substantial
dilution to purchasers under such offerings.


OPERATING HAZARDS AND RISKS ASSOCIATED WITH THE MINING INDUSTRY THAT THE COMPANY
WILL FACE IF IT BEGINS EXPLORATION WORK ON ITS PROPERTIES

Mining operations generally involve a high degree of risk, which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Hazards such as unusual or unexpected formations and other conditions
are involved. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration,
development and production of precious and base metals, any of which could
result in work stoppages, damage to or destruction of mines and other producing
facilities, damage to life and property, environmental damage and possible legal
liability for any or all damage. The Company may become subject to liability for
cave-ins and other hazards for which it cannot insure or against which it may
elect not to insure where premium costs are disproportionate to the Company's
perception of the relevant risks. The payment of such insurance premiums and of
such liabilities would reduce the funds available for exploration activities.


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RISKS ASSOCIATED WITH THE COMPANY'S FAILURE TO COMPLY WITH CANADIAN MINING
REGULATIONS AND GOVERNMENT RULES ASSOCIATED WITH MINING IN CANADA

The Company carries out exploration in Canada in the province of British
Columbia. In Canada, the Company's claims are worked under Provincial Mines Acts
and Regulations. The Company has the right to carry out exploration on its
claims subject to the terms and conditions outlined by the local mines
inspectors. The Company from time to time may be required to post small monetary
bonds to be held against project cleanup. Provincial labor health and
welfare codes apply to all operations. The Company generally carries out all
exploration work utilizing professional exploration consultants who carry
general liability and third party insurance.

The Company's exploration activities in Canada are regulated by various
government agencies, both federal and provincial. Environmental legislation
provides for restrictions and prohibitions on spills and releases or emission of
various substances produced in association with certain mining industry
operations, such as seepage from tailings disposal areas that would result in
environment pollution. A breach of legislation may result in imposition of fines
and penalties.

The Company has obtained all necessary permits for exploration work performed to
date, and to the best of its knowledge, the Company is in compliance with all
material laws and regulations that currently apply to its activities. There can
be no assurance, however, that all permits that the Company may require for its
future operations will be obtainable on reasonable terms or that such laws and
regulation would not have an adverse effect on any mining project that the
Company might undertake.

The Company is aware that environmental legislation is evolving in a manner that
will require more stringent assessments of proposed projects, stricter standards
and enforcement, including increased fines and penalties for non-compliance, and
a heightened degree of responsibility for companies and their officers,
directors and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the Company's
operations. Environmental hazards caused by previous or existing owners or
operators of the properties may exist on the Company's properties that are
unknown to the Company at the present time. The Company is not covered by any
form of environmental liability insurance at the present time.


RISKS ASSOCIATED WITH RECLAMATION OBLIGATIONS THAT THE COMPANY WILL BE EXPOSED
TO SHOULD IT DECIDE TO EXPLORE ITS PROPERTIES

Reclamation requirements vary depending on the location and the managing agency,
but they are similar in that they aim to minimize long-term effects of
exploration by requiring the operating company to control possible harmful
discharges and to reestablish to some degree, pre-disturbance land forms and
vegetation. The Company is actively providing for or has carried out any
requested reclamation activities on its properties.


THE UNCERTAINTY OF THE COMPANY'S ABILITY TO OBTAIN FUTURE PERMITS AND LICENSES
SHOULD IT DECIDE TO EXPLORE ITS PROPERTIES

The operations of the Company may require licenses and permits from various
governmental authorities. There can be no assurances that the Company will be
able to obtain all necessary licenses and permits that may be required to carry
out exploration, development and mining at its properties.


                                       4


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RISKS ASSOCIATED WITH PENNY STOCK CLASSIFICATION

The Company's stock is subject to "penny stock" rules as defined in 1934
Securities and Exchange Act rule 3151-1. The Commission has adopted rules that
regulate broker-dealer practices in connection with transactions in penny
stocks. The Company's common shares are subject to these penny stock rules.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. Penny stocks generally are equity
securities with a price of less than U.S. $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document 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. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation.

In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the common shares in the United
States and shareholders may find it more difficult to sell their shares.


DEPENDENCE ON KEY PERSONNEL

The Company's continued success is dependent, to a large degree, upon the
efforts of its current executive officers. The loss or unavailability of any
such person could have an adverse effect on the Company. At the present time
the Company does not maintain key man life insurance policies for any of these
individuals. Also, the continued success and viability of the Company is
dependent upon its ability to attract and retain qualified personnel in all
areas of its business, especially management positions. In the event the
Company is unable to attract and retain qualified personnel, its business may
be adversely affected. There are currently no employment agreements in place.
Management is; however, currently negotiating agreements with the executive
officers of the Company.


LIMITED OPERATING HISTORY

The Company only has no operating history upon which to base an evaluation of
its business and prospects. Operating results for future periods are subject to
numerous uncertainties, and there can be no assurance that the Company will
achieve or sustain profitability on an annual or quarterly basis. The Company's
prospects must be considered in light of the risks encountered by companies in
the early stage of development, particularly companies in new and rapidly
evolving markets. Future operating results will depend upon many factors,
including the level of product and price competition, the Company's success in
attracting and retaining motivated and qualified personnel, and in particular,
the ability of the Company to develop its inventory of properties and to raise
additional capital for other ventures within the mining industry.


                                       5


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THE ABILITY TO MANAGE GROWTH

Should the Company be successful in its efforts to develop its gemstone
properties or to raise capital for other mining ventures it will experience
significant growth in operations. If this occurs management anticipates that
additional expansion will be required in order to continue development. Any
expansion of the Company's business would place further demands on its
management, operational capacity and financial resources. The Company
anticipates that it will need to recruit qualified personnel in all areas of its
operations. There can be no assurance that the Company will be effective in
attracting and retaining additional qualified personnel, expanding its
operational capacity or otherwise managing growth. The failure to manage growth
effectively could have a material adverse effect on the Company's business,
financial condition and results of operations.


LACK OF A DIVIDEND POLICY

The Company does not presently intend to pay cash dividends in the foreseeable
future, as any earnings are expected to be retained for use in developing and
expanding its business. However, the actual amount of dividends received from
the Company will remain subject to the discretion of the Company's Board of
Directors and will depend on results of operations, cash requirements and
future prospects of the Company and other factors.


POSSIBLE DILUTION TO PRESENT AND PROSPECTIVE SHAREHOLDERS

The Company's plan of operation, in part, contemplates the accomplishment of
business negotiations by the issuance of cash, securities of the Company, or a
combination of the two, and possibly, incurring debt. Any transaction involving
the issuance of previously authorized but unissued shares of common stock, or
securities convertible into common stock, would result in dilution, possibly
substantial, to present and prospective holders of common stock.


COMPETITION

There is competition from other mining exploration and development companies
with operations similar to those of the Company's. Many of the mining companies
with which the Company competes have operations and financial strength many
times that of the Company. Nevertheless, the market for the Company's possible
future production of minerals tends to be commodity oriented, rather than
company oriented. Accordingly, the Company expects to compete by taking
advantage of the market for all minerals present in its properties, to offset
the primarily fixed costs of mining any one of the jointly-occurring minerals.
Commodity prices fluctuate and there is no guarantee that market prices at any
one time will be higher than production costs.

The Company does not engage in any material hedging or other transactions which
are intended to manage risks relating to the fluctuations in mineral prices and
does not intend to do so in the foreseeable future.


HISTORY OF NET LOSSES

The Company has had net losses for the past three years.

In the fiscal year ended 12/31/99, the Company had a net loss of ($58,216); in
the fiscal year ended 12/31/98, the Company had a net loss of ($118,524); and,
in the fiscal year ended 12/31/97, the Company had a net loss of ($521,159).

There can be no assurance that this trend will not continue.


                                       6


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SIGNIFICANT CUSTOMERS AND/OR SUPPLIERS

N/A


EMPLOYEES

At 3/15/00 the Company operated with the services of its Directors, Executive
Officers, and no additional employees or consultants. There is no collective
bargaining agreement in place.


ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------

The Company rents, with no lease commitment, approximately 1,200 square feet of
space at Suite U13 Broadway Plaza, 601 West Broadway, Vancouver, British
Columbia Canada V5Z 4C2 for administrative efforts. The Company considers the
facility adequate for current purposes.


THE WAY 1 CLAIM - VERNON AREA SOUTHEASTERN, BRITISH COLUMBIA

The Way 1 does not represent a producing property. It is currently in a dormant
status. The Company has had no revenue from mining operations on The Way 1 Claim
to date.


ACQUISITION OF THE WAY 1 CLAIM

On May 5, 1998, the Company acquired a 100% interest in the Way 1 Claim and two
other claims, the Banjo 1 and the Banjo II for total consideration of $50,000
from 456786 B.C. Ltd., a company controlled by Terry G. Cook, the President of
the Company. The consideration is in the form of a note payable on demand in
favor of the vendor and bears no interest.


LOCATION AND ACCESS OF THE WAY 1 CLAIM

The Way 1 claim is a Four-Post Mineral claim located 23 kilometers north of
Vernon and 15 kilometer's south southwest of Falkland in the Okanagan region of
south-central British Columbia. The claim rests on the Thompson Plateau at 50
degrees 22' 27" North Latitude and 119 degrees 35' 17" West Longitude near the
headwaters of Ewers Creek. Ewers Creek flows east 8.5 kilometers where it joins
Equesis Crees south to the north arm of Okanagan Lake. Wiwash Rock Mountain and
Pinaus Lake lie 4.5 kilometres northeast and 6 kilometres north of the claims
respectively.

Access to the claim is gained by driving south on Westside Road to Six Mile
Road, 10.3 kilometers to the McGregor Main Logging Road and west 13.5 km to the
southern part of the claim.


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TOPOGRAPHY AND PHYSIOGRAPHY

The topographic relief is steep on the west and northern half of the property as
it lies at or near the bottom of the Ewers Creek Canyon. From here the terrain
rises in a series of vertical cliffs 25-50 meters in height from an elevation of
1,605 meters above sea level to the gently rolling Thompson Plateau with a
maximum elevation of 1490 meters on the eastern edge of the claim. A deeply
incised V-shapped valley with steep flow gradient bisects the middle of the
claim.

Vegetation includes birch, spruce and minor hemlock and cedar, with typical open
bush and dry grass of the Okanagan Valley. A large area of the claim is logged;
the resulting new undergrowth is a dense jungle of alder and spruce making
traversing arduous.


HISTORY AND PREVIOUS WORK

No history of any note has been found regarding the Way 1.


PROPERTY STATUS

The Way1 claim consists of the following mineral claim, located within the
Vernon Mining District:

Claim Name        Tenure Number          Units            Record Date

Way 1                    371607             20                9/04/99


PROPERTY GEOLOGY

The Way 1 claim is underlain by the volcanic and sedimentary rocks of the
Kamloops Group with the dominant lithology located as outcrop on the property
being the basal members of the Tranquille Formation of the Kamloops Group. An
angular unconformity found in Ewer Creek canyon arks the paleosurface of the
Upper Paleozoic sedimentary and volcanics of the Harper Ranch Group on which the
Kamloops group is laid. This unconformity slopes gently to the west at about 10
degrees.

In the course of prospecting, nine distinct geological units were recognized:

HARPER RANCH GROUP (Permian)

Unit 1            Dark green to black highly altered andesite with minor
                  diorite and lapilli tuff found in the Ewer Creek Canyon on the
                  north part of the claim.

Unit 2            Massive crystalline limestone with minor argillaceous tuff,
                  argillite and quartizite. This unit outcrops in the deeply
                  incised valley in the center of the claim and makes some of
                  the cliffs in the upper reached of Ewer Creek.


                                       8


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TRANQUILE FORMATION

All of the units on the property appear to have waterlain being locally well
bedded and have been dipped to the west southwest at about 10-15 degrees.
Downdip as the basin deepens as the unitspass from the basal unit 3 to a
calcareous siltstone. Descriptions of the individual units are as follows:

Unit 3            Yellowish-brown to red weathering, well-bedded
                  volcaniclastic/arkosic matrix or clast dominant sediments.
                  Lithologies include immature tuffacewous wacke, arkose, minor
                  siltstone and sandstone and layers of lapilli tuff. Locally
                  angular clasts of scoreacous basalt and andesite up to 15 cm
                  in width occupy as much as 40% of the rock. Individual beds
                  vary from 2mm to 25cm in thickness with color varying from
                  pale yllow t dark yellow brown. The rock is soft but well
                  lithified. Sole plating, mud cracks and ripples can be seen in
                  a large amount of the outcrops near Ewer Creek.

Unit 4            Poorly lithified ash flow tuff with abundant clasts of
                  basalt making up 50% of the outcrop. This unit is found mainly
                  on top of the cliffs marking deeply incised creek in the north
                  central of the claim and on the road near the northwestern
                  boundary of the claim.

Unit 5            Reddish to maroon weathering, variably resistant, massive
                  heterolithic lahar. Blocks of mostly basalt occur a well
                  rounded clasts less than or equal t 30cm in diameter in a
                  medium to coarse grained arkosic/tuff matrix. This unit
                  contains abundant agate sometime occupying more than 50% of
                  the rock.

Unit 6            Dark green, dark green grey lapilli tuf outcropping near the
                  edge of the above unit and contains abundant agate.

Unit 8            Uniform black to dark green calcareous tuffaceous siltstone.

DEWDROP FORMATION

Unit 7            Fresh unaltered predominately scoriacous basalt/andesite
                  forming sills cutting the Tranquille Formation. Where flow
                  banding is evident these are locally filled with abundant
                  agate. On the western boundary of th claim adjoining a
                  forestry cut block this unit is characterized by very fine
                  flows 2-3mm in thickness alternating red and black on fresh
                  surface and weathering dark and white respectively.

Unit 9            Fresh unaltered predominately scoriacous basalt/andesite
                  forming the topographic highs on the western edge of the
                  property.


CONCLUSIONS AND RECOMMENDATIONS

No economic minerals were found in the limited prospecting performed on the
property in 1997. Geology of the Way 1 claim appears to be volcanoclastic
sediments of the Tranzuille Formation of the Kamloops Group overlaying th
altered andesites lapilli tuffs and diorites of the Permian aged Harper Ranch
Group. In addition several outcrops were noted of basalt/andesites of the
Dewdrop Formation which are also part of the Kamloops Group.

Management believes that future exploration, should be concentrated on the
eastern half of the Way 1 claim.


                                       9


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THE BANJO 1 AND 2 CLAIMS

The Banjo 1 and 2 Claims do not represent a producing property. They are both
currently in a dormant status. The Company has had no revenue from mining
operations on Banjo 1 and 2 Claims to date.


ACQUISITION OF THE BANJO 1 AND 2 CLAIMS

On May 5, 1998, the Company acquired a 100% interest in the Banjo 1, Banjo 2 and
Way 1 claims for total consideration of $50,000 from 456786 B.C. Ltd., a company
controlled by Terry G. Cook, the President of the Company. The consideration is
in the form of a note payable on demand by the vendor and bears interest at 8%
per annum.


LOCATION AND ACCESS OF THE BANJO 1 AND 2 CLAIMS

The Banjo 1 & 2 claims are Four-Post Mineral claims located 21 kilometers north
of Vernon and 16 kilometres south southwest of Falkland in the Okanagan region
of south-central British Columbia The claim rests on the Thompson Plateau
centered at 50(Degree) 21' 27" North Latitude and 119(Degree) 31' 17" West
longitude (UTM Co-Ordinates 5581000 N. 320000 E) near Ewers Creek. Ewers Creek
flows east 2.5 kilometers where it joins Equesis Creek (Six Mile Creek) south to
the north arm of Okanagan Lake. Siwash Rock Mountain and Pinaus Lake lie 1.0
kilometer north and 7 kilometers northwest of the claims respectively.

Access to the claim is gained by driving south on Westside Road to Six Mile
Road, 10.3 kilometers to the McGregor Main Logging Road and west 7.0 km. to the
central part of the claim.


TOPOGRAPHY AND PHYSIOGRAPHY

The topographic relief is steep on the northern half of the Banjo 2 property as
it lies at or near the bottom of the Ewers Creek Canyon. From here the terrain
rises in a series of vertical cliffs 25-50 meters in height from an elevation of
875 meters (2400') above sea level to the gently rolling Thompson Plateau with
a maximum elevation of 1433 meters (4700') on the southern edge of the claim.

Vegetation includes birch, spruce and minor hemlock and cedar, with typical open
bush and dry grass of the Okanagan Valley. A large area of the claim is logged;
the resulting new undergrowth is a dense jungle of alder and spruce making
traversing arduous.


PROPERTY STATUS

The Banjo 1 & 2 claims consist of the following mineral claims, located within
the Vernon Mining District:

Claim Name        Tenure Number             Units             Record Date

Banjo 1           366334                    20                10/17/98
Banjo 2           366335                    20                10/18/98


                                       10


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HISTORY AND PREVIOUS WORK

No history of any note has been found regarding the Banjo 1 & Banjo 2 claims but
they are in close proximity to the Klinker Precious Opal Prospect.


PROPERTY GEOLOGY

A large portion of the Banjo 1 & 2 claims are underlain by the volcanic and
sedimentary rocks of the Harper Ranch Group with the dominant lithology located
as outcrop on the property being the andesite flows and flow breccias with
associated lapilli tuffs. Two bands of calcareous argillites with minor
siltstones form the sides of a tightly folded syncline whose axial plane strikes
340(Degree) and appears to plunge to the northwest. There was not enough
exposure to ascertain predominate fault structures within the Harper Ranch Group
but late faulting associated probably with Tertiary volcanism indicate a set of
normal faults striking north/south with a downthrow on the western side.

An angular unconformity marks the paleosurface on which the sediments and
volcanics of the Kamloops Group are laid. This unconformity dips gently to the
west at about 10 degrees.

In the course of prospecting, ten distinct geological units were recognized:

KAMLOOPS GROUP (TERTIARY)

(UNITS FOUND ON THE SOUTHERN HALF OF BANJO 1)

DEWDROP FORMATION

Unit 10           Basalt/Andesite and Top Flow Breccias Fresh unaltered;
                  black, chocolate brown in colour with minor maroon, rusty red,
                  terra cotta brown section. Also include within this assemblage
                  is the minor interbedded tuffs and tephras.


Unit 9            Lapilli Tuff: Fresh unaltered black to dark green grey
                  volcanoclastic forming lenses and reefs within the above
                  basalts. Unit is characterized by well rounded lapilli up to 5
                  cm. In diameter. The basal members of this unit are locally
                  filled with abundant agate.

TRANQUILLE FORMATION

Unit 8:           Matrix Dominant Lahar: Yellowish-brown to red weathering,
                  well-bedded volcanoclastic/arkosic. Lithologies include
                  immature tuffaceous wacke, arkose, minor silstone and
                  sandstone and layers of lapilli tuff. Locally angular clasts
                  of scoreacous basalt and andesite up to 15 cm. in width occupy
                  as much as 40% of the rock. Individual beds vary from 2 mm to
                  25 cm in thickness with colour varying from pale yellow to
                  dark yellow brown. The rock is soft but well lithified.

Unit 7:           Lapilli Tuff: Dark green, dark green grey outcropping near the
                  edge of the above unit and contains abundant agate


                                       11


<PAGE>

Unit 6:           Clast Dominat Lahar: Reddish to maroon weathering, variable
                  resistant, Massive Heterolithic. Blocks of mostly basalt occur
                  as well rounded clasts under 30 cm. in diameter in a medium to
                  coarse grained arkosic/tuff matrix. This unit contains
                  abundant agate sometime occupying more than 50% of the rock.

HARPER RANCH GROUP (CARBONIFEROUS/PERMIAN)

Unit 5            Andesitic (?) Top Flow Breccia Dark green to black, moderately
                  altered dense, siliceous with minor Lapilli Tuff on the
                  southwestern part of the Banjo 2 claim. Very fine grained and
                  breaking with a concoidal fracture containing hornblende and
                  augite as tiny black grains

Unit 4            Lapilli Tuff: Mottled dark green to black, moderate altered
                  with rounded lapilli up to 4 mm in diameter within a fine ash
                  tuff matrix. Weathers to a light brown to khaki on the surface
                  with a powder like coating. This unit forms the predominate
                  unit within the prospecting area. Generally massive to weakly
                  fractured.

Unit 3            Argillite: Black to rust coloured, calcareous moderately
                  fractured with fractures containing quartz, calcite and
                  locally 1 - 2% pyrite


Unit 2            Diorite (?): A highly altered dark green to black more mafic,
                  coarser grained and overall less sheared and fractured
                  endmember of unit 1 below. Contains amber coloured quartz eyes
                  and 1 - 2% pyrite

Unit 1            Greenstone: Highly altered fractured and sheared fractures
                  filled with quartz, carbonate and locally minor gypsum

A total of 7 rock samples were taken on the property and were assayed for any
economic minerals. The most mafic endmember of the volcanic group, Unit 2 was
correspondingly anomalous in Ni/Co/Cr. running 463 PPM No., 44 PPM Co. and 113
PPM Cr. respectively.  All other samples were not anomalous.

CONCLUSIONS

No economic minerals were found in the limited prospecting performed on the
property in 1997. Geology of the Banjo 1 claim consists largely of the volcanics
and associated volcanoclastic lapilli tuffs with minor calcareous argillites of
the Carboniferous/Permian Harper Ranch Group. An unconformity marks the
paleosurface of the Harper Ranch Group onto which the volcanoclastic sediments
of the Tranquille Formation and the basalt/andesites of the Dewdrop Formation of
the Kamloops Group are laid.

This unconformity dips to the west at 10(Degree) transects the Banjo 1 claim in
a northwest-southeast direction

Management believes that if the Company does any work on the future in this area
that exploration should be concentrated on:

1) Structures cutting the Harper Ranch Group especially the faults that have a
north-south orientation to ascertain if there could be possibility of some
economic minerals within the faults. 2) The basal members of the Tranquille
sediments that lie on the unconformity with the Harper Ranch Group in the
southern half of the Banjo 1 claim.


                                       12


<PAGE>

THE EWER/KLINKER MINERAL CLAIMS

The Ewer/Klinker Mineral Claims do not represent a producing property and the
Company's current operations are passive, in that the Company has a 20% interest
in a joint-venture which is involved in the Ewer/Klinker Mineral Claims.

To date, the joint venture has been engaged in no activity on the Ewer/Klinker
Mineral Claims.

The Company has had no revenue from mining operations on The Ewer/Klinker
Mineral Claims.


ACQUISITION OF INTEREST

On April 10, 1996, the Company entered into an agreement which was an Option To
Purchase some mineral claims (Ewer/Klinker Mineral Properties) located near
Vernon, British Columbia. This agreement originally gave the Company an option
to acquire a 100% interest in the claims, but that option expired unexercised on
January 15, 1998 and at that time a joint venture was created in which the
Company had a 20% interest.


LOCATION AND ACCESS

The Ewer/Klinker Mineral Properties are located approximately 30 kilometers
northwest of Vernon in south central British Columbia (lat: 50 degrees, 21.5'
north longtitude, 34' east, Westwold 82L/5 1:50,000 map sheet).

HISTORY AND PREVIOUS WORK

The Klinder and Ewer claims were staked in 1991 and 1992. In 1995 and 1996, the
area was bulk sampled using mechanized equipment. Numerous nodules and veins of
precious opal have been located in several pits on the site; however, to the
best of the Company's knowledge a significant economic opal deposit has not been
discovered to date.


PROPERTY STATUS

No information has been made available to the Company regarding "property
status"


PROPERTY GEOLOGY

No information has been made available to the Company regarding "property
geology".


CONCLUSIONS

Management believes that further work must be done on the Ewer/Klinker Claims to
allow an adequate resource estimate to be made. To date no work has been done by
the joint venture partners in this area and management considers the property to
be in a dormant status.


                                       13


<PAGE>

ITEM 3  LEGAL PROCEEDINGS
-------------------------

Other than as discussed below, the Company knows of no material, active or
pending legal proceedings against them; nor is the Company involved as a
plaintiff in any material proceeding or pending litigation.

Other than discussed below, the Company knows of no active or pending
proceedings against anyone that might materially adversely affect an interest of
the Company.

On March 26, 1997, the Joint venture Partner (re: Ewer/Klinker Mineral
Properties) filed a statement of claim in the Supreme Court of British Columbia
alleging than an amount of $29,847 was due for work done, goods supplied and
accounts incurred. The Company states that it has returned goods costing $12,499
thereby effectively reducing the Joint Venture Partner's claim to $17,348 for
various expenses that the Joint Venture Partner alleges are the responsibility
of the Company's wholly owned subsidiary, Dakota. Management believes that it is
not responsible for a number of expenses and believes that a number of expenses
are priced improperly, according to the terms of the Option Agreement.
Accordingly, management believes that this claim will be resolved with the Joint
Venture Partner for an amount considerably less than the amount requested.


ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY ISSUES
----------------------------------------------------------

No matters were submitted to a vote by Security Holders during the last quarter
of this fiscal year.


                                     PART II


Item 5.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
         RELATED SHAREHOLDER MATTERS
----------------------------------------------------------------------------

The Company's common stock trades on the National Quotation Bureau's Electronic
Pink Sheets in the United States, having the trading symbol "CANL" and
CUSIP# 136414-10-9.
Trading volume and high/low/closing prices for the past ten quarters are
disclosed in the following table:

                Over-the-Counter Bulletin Board Trading Activity

 Quarter
  Ended           High            Low            Close                  Volume
--------        -------         -------         -------               ---------
06/30/99         $0.015          $0.010          $0.015                  11,600
03/31/99         $0.01           $0.01           $0.01                    3,000
12/31/98         $0.05           $0.01           $0.01                   34,900
09/30/98         $0.06           $0.03           $0.05                    3,000
06/30/98         $0.07           $0.029          $0.03                  251,800
03/31/98         $0.05           $0.031          $0.031                 113,200
12/31/97         $0.12           $0.05           $0.05                  437,600
09/30/97         $0.12           $0.06           $0.12                  569,200
06/30/97         $0.365          $0.063          $0.125               1,125,100
03/31/97         $0.75           $0.188          $0.188               1,708,700


                                       14


<PAGE>

The Company's common stock is issued in registered form. Madison Stock Transfer
(located in Brooklyn, New York) is the registrar and transfer agent for the
common stock.

On March 15, 2000 the shareholders' list for the Company's common shares showed
twenty eight registered shareholders and 17,211,000 shares outstanding.

The Company has researched the indirect holdings by depositories and other
financial institutions and believes it has in excess of 325 shareholders of its
common stock.

The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain future earnings for use in its operations and expansion
of its business.

The Company did not issue any unregistered securities during the quarter ended
December 31, 1999.


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

The Company has minimal cash and has not yet developed any producing mines.
The Company has no history of earnings, and due to the nature
of its business, there can be no assurance that the Company will be profitable.
Since the Company has been a development stage company since inception and has
not generated revenues, the Company operates with minimal overhead.
The Company will need to raise additional funds in the next 12 months, either in
the form of an advance or an equity investment by the Company's President; or in
the form of equity investment by outside investors, or some combination of each.

The Company's primary activity for the next fiscal year will be to seek,
investigate and, if such investigation warrants, acquire controlling interest in
business opportunities presented to it by persons or firms involved in any
appropriate business who wish to seek the advantages of being acquired by the
Company. The Company would not restrict any acquisitions to the gemstone
exploration business but would examine any business which would be beneficial to
the Company's shareholders.

Management is currently concentrating upon achieving the two objectives of: (i)
eliminating the contingent liability resulting from the existence of a legal
action against the Company by the Joint-Venture Partner of the Ewer-Klinker
mineral properties; thereby eliminating what may possibly be an impediment to
the Company attracting acquisitions and new capital and (ii) achieving
full-reporting status for the Company with the U.S. Securities & Exchange
Commission.  If the Company is successful in achieving either or both
of the above objectives, the Company may be in a significantly better position
to attract acquisition candidates and equity capital. If available, future
equity financing may result in substantial dilution to purchasers under such
offerings.

In addition to its immediate task of improving the Company's ability to attract
equity capital, management continues to assess whether further exploration in
its core area is warranted, and to assess the viability of further exploration
on the Company's existing mineral properties, namely: (i) the Ewer-Klinker
property, in south-western British Columbia, Canada,in which the Company holds a
20% joint-venture interest and (ii) the Way I, Banjo I, and Banjo II properties
in which the Company holds a 100% interest.


                                       15


<PAGE>

In view of the Company's very limited capital, Company management will continue
to seek out potential joint-venture partners with the capital and expertise to
pursue further exploration in the Company's core area. Bringing in additional
participants to further the company's exploration efforts may result in the
Company's equity interest in the above mineral claims declining as possible new
participants earn equity interests as a result of contributions of capital and
mineral exploration expertise.

At present management is not aware of any joint-venture proposals offered to the
Company, to further exploration. Management is however currently negotiating
with the Joint-Venture Partner of the Ewer-Klinker mineral property, with the
objective of reaching a settlement with regard to the legal action taken by the
Joint-Venture Partner.  Settlement negotiations have been going on between the
two parties for over a year. It is possible that an out-of-court settlement may
be reached.  Any possible settlement could involve the transfer to the Joint-
Venture Partner, of one or more of the Company's mineral property interests, or
a portion of the Company's interest in a particular property or properties, in
return for cancellation of this lawsuit and a release from any and all claims
that might be filed against the Company by the Joint-Venture Partner. If the
Company is successful at reaching a settlement of this dispute, the Company's
ability to attract new partners with capital and to attract exploration
expertise, may be enhanced.

The Company has not conducted any product research and development and has no
plans to conduct any product research and development over the next fiscal year.

Management is not aware of any expected purchase or sale of any plant or of any
significant equipment. Management is however involved in negotiations to settle
the legal dispute with the Joint-Venture Partner of the Ewer-Klinker property,
where any settlement could possibly involve the Company transferring some
property or properties as part of any settlement.

Management is not aware of any expected significant changes in the number of
employees.


RESULTS OF OPERATION

The Company's financial statements are stated in U.S. Dollars and are prepared
in accordance with United States GAAP.

The Company has for the past three years financed its activities through the
distribution of equity capital. The timing of such distributions was dependent
on the requirements of the Company and the economic climate. The Company
anticipates having to raise additional funds by equity issuance in the next
several years, as the Company does not expect to generate material revenue from
mining operations or to achieve self-sustaining commercial mining operations for
several years.

Because the Company has minimal cash and has not yet developed any producing
mines, its ability to realize assets and discharge its liabilities through the
normal course of its operations is dependent on continued funding from companies
controlled by the president, the receipt of additional funds from investors, and
the establishment of successful operations.


                                       16


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary source of funds since incorporation has been through the
issue of its common stock and through advances from shareholders. The Company
has no revenue from mining to date and does not anticipate mining revenues in
the foreseeable future.

The Company's cash position at 12/31/99 was $2,083 compared to $21,029 at
12/31/98.

At 12/31/99 the Company had a Canadian goods and services tax receivable of
$1,500; whereas on 12/31/98 the company had a Canadian goods and services tax
receivable of $1,369.

Advances from shareholders, not settled by issuing shares, was $7,139 in Fiscal
1999; compared to $6,612 in Fiscal 1998.

At 12/31/99,the Company had a negative working capital position of ($67,985),
compared to a negative working capital position of ($12,510) at 12/31/98.

Because the Company has minimal cash and has not yet developed any producing
mines, its ability to realize assets and discharge its liabilities through the
normal course of its operations is dependent on continued funding from companies
controlled by the president, the receipt of additional funds from investors, and
the establishment of successful operations.

During the fiscal year ended 12/31/99 the Company incurred $0 in marketing
expenditures compared to $0 spent on marketing in the fiscal year ended
12/31/98.

During the fiscal year ended 12/31/99 the Company incurred management and
consulting fees of $24,326 compared to management and consulting fees of $18,200
incurred in the fiscal year ended 12/31/98.

During the fiscal year ended 12/31/99 the Company incurred a total of $58,506 in
administrative expenses compared to $35,735 incurred in the fiscal year ended
12/31/98.

The Company does not know of any demands, commitments, events or uncertainties
that will result in, or that are reasonably likely to result in, the Company's
liquidity either materially increasing or decreasing at present or in the
foreseeable future. Material increases or decreases in the Company's liquidity
are substantially determined by the success or failure of the Company's
exploration programs or the future acquisition of projects.


CONTINGENT LIABILITY

On March 26,1997, the Joint-Venture Partner on the Ewer-Klinker property filed a
statement of claim in the Supreme Court of British Columbia alleging that an
amount of $29,847 USD was due for work done, goods supplied and accounts
incurred. There has been an extended period of time in which there has been an
absence of efforts to pursue this claim in the courts.  The Company has returned
goods costing $12,499 USD thereby effectively reducing the Joint-Venture
Partner's claim to $17,348 USD for various expenses that the Joint-Venture
Partner alleges are the responsibility of Dakota Mining & Exploration Ltd, the
Company's wholly-owned operating subsdiary.  However, Dakota's management
believes that it is not responsible for a number of expenses and believes that a
number of expenses are priced improperly, according to the terms of the Option
Agreement.  Accordingly, management believes that this claim will be resolved
with the Joint-Venture Partner for an amount considerably less than the amount
requested.


                                       17


<PAGE>

Settlement negotiations have been going on between the two parties for over a
year.It is possible that an out-of-court settlement may be reached. Any possible
settlement could involve the transfer to the Joint-Venture Partner, of one or
more of the Company's mineral property interests, or a portion of the Company's
interest in a particular property or properties, in return for cancellation of
this lawsuit and a release from any and all claims that might be filed against
the Company by the Joint-Venture Partner.


SIGNIFICANT UNCERTAINTIES

The Company invests in mining properties in Canada. These projects may be
subject to substantial regulatory hurdles, financing and economic uncertainties.
There is no assurance that the Company can finance the additional funds
necessary to complete development work and, if warranted, to bring a property
into production. There is also no assurance that the properties will prove to be
profitable if they are brought into production.


WRITEDOWN OF THE EWER-KLINKER PROPERTY

In 1997 the Company's 20% interest in the Ewer-Klinker mineral property near
Vernon, British Columbia, Canada was written down on the company's financial
statements, to an estimated net realizable value of $60,464, based on the "worst
case" estimate determined by a consultant geologist. This writedown was
initiated by the new management installed in May, 1998 after a review of the
geologist's report and following protracted negotiations with the Joint-Venture
Partner to attempt to settle the unresolved legal matters referred to above.

In 1998, the mineral property became an investment in a joint venture and was
written down to a value of $1.00 because continued protracted negotiations
with the Joint-Venture Partner meant the Company had no access to information to
make an updated valuation of the property based on discounted cash flows and had
no information to assess the 80% Joint-Venture partner's ability to fund the
mining operations.


ACQUISITION OF WAY I, BANJO I, AND BANJO II PROPERTIES

The Company purchased mineral properties from a company controlled by a
significant shareholder, who is also a Director of the Company, for a price of
$50,000 and the purchase price was paid with a promissory note, as disclosed in
Note 5(f) and Note 9 to the Company's financial statements to December 31,1998,
with interest at 8% per annum. There was no independent analysis done to
determine the value. Instead the directors arbitrarily set the value after
considering the consulting geologist's report on neighboring properties and the
possible strategic role of this assembly of properties in a larger development.
The Way I and Banjo mineral claims are strategically located as they are
adjacent to the Ewer-Klinker property.

In 1998 the property was written down to $1.00 to recognize the company's
inability to prepare an updated valuation on the property owned in the Joint-
Venture which is adjacent to this property.  In addition the principal of the
note payable was reduced by the significant shareholder from $50,000 to $24,841,
being the cost of the property to the significant shareholder.  This property
was purchased as a possible strategic role as part of a larger development
incorporating the Joint-Venture property.


                                       18


<PAGE>

RESULTS OF OPERATIONS

The Company is in the business of acquiring and exploring mineral properties
with the aim of developing them to a stage where they can be exploited at a
profit. At that stage, the Company's operations would to some extent be
dependent on the world market prices of any minerals mined. The Company does not
currently have any producing properties.


FISCAL YEARS ENDED 12/31/99, 12/31/98, AND 12/31/97

During fiscal year 1996, the Company entered into an agreement which was an
Option To Purchase certain mineral claims, known as the Ewer-Klinker claims,
located near Vernon, British Columbia, Canada. The Company advanced $475,000 in
the form of option payments pursuant to this agreement, which gave the Company
the an option to acquire a 100% interest in the Ewer-Klinker claims. The
activities of the Company since advancing the option payments noted above can be
seen as generally decreasing during this time.

Exploration costs were $ 3,928 in Fiscal 1997, $0 in Fiscal 1998, and $0 in
Fiscal 1999.

The Company's Option expired unexercised on January 15,1998 and a joint-venture
was then created with the Company obtaining a 20% joint-venture interest in the
mineral claims.

The joint venture has a Vernon mining company as the operator and managing
venturer. However, the activities are to be controlled by a management
committee.

Each joint venture party is required to advance funds for the property
development or the opal business and failure to do so will result in a dilution
of their earned percentage interest. To date, the management committee has not
been formed and the activities of the joint venture have not commenced. At
present, the Company is not aware of any financial commitments to the joint
venture under the direction of the management committee or when any such
commitments may start.

The Company had title to several mineral claims on land adjacent to the property
referred to above and most of these claims were allowed to lapse. As the future
value of these properties is unknown and their cost are minimal, their costs
were written off in 1997.

Fiscal 1999 Administrative Expenses were $58,506; $35,735 incurred in Fiscal
1998, and $72,308 incurred in Fiscal 1997. A pattern of decreased Company
activity in acquisition and exploration began in Fiscal 1997.

The net loss for Fiscal 1999 ended 12/31/99 was ($58,216), compared to a net
loss of ($118,524) for Fiscal 1998 ended 12/31/98, and a net loss of ($521,159)
for Fiscal 1997 ended 12/31/97.

The loss for Fiscal 1998 includes a write-off of investment in joint-venture of
$60,463; and a write -off of development and property costs of $24,840; for
total write-offs of $85,303.

The loss for Fiscal 1997 includes a write-off of development and property costs
of $413,334.

Net loss was ($0.00) per share for Fiscal 1999. Net Loss was ($0.01) per share
for Fiscal 1998, and the Net Loss was ($0.04) per share for Fiscal 1997.


                                       19


<PAGE>

VARIATION IN OPERATING RESULTS

None of the Company's properties are yet in production and consequently, the
properties do not produce any revenue. As a result there is little variation
expected in operating results from year to year and little is to be expected
until such time, if any, as a production decision is made on one of its
properties.

The Company derives interest income on its bank deposits, which depend on the
Company's ability to raise funds.

Management periodically through the exploration process, reviews results both
internally and externally through mining related professionals. Decisions to
abandon, reduce or expand exploration efforts is based upon many factors
including general and specific assessments of mineral deposits, the likelihood
of increasing or decreasing those deposits, land costs, estimates of future
mineral prices, potential extraction methods and costs, the likelihood of
positive or negative changes to the environment, permitting, taxation, labor and
capital costs. There cannot be a predetermined hold period for any property as
geological or economic circumstances render each property unique.

The Company has for the past three years financed its activities through the
distribution of equity capital. The timing of such distributions was dependent
on the requirements of the Company and the economic climate. The Company
anticipates having to raise additional funds by equity issuance in the next
several years, as the Company does not expect to generate material revenue from
mining operations or to achieve self-sustaining commercial mining operations
for several years.


KNOWN TRENDS

Management has determined that because of the deficiency in working capital,
significant operating losses and lack of liquidity, there is doubt about the
ability of the Company to continue in existence unless additional working
capital is obtained. Consequently such trends or conditions could have a
material adverse effect on the Company's financial position, future results of
operations, or liquidity. The Company currently has plans to raise sufficient
working capital through equity financing or reorganization of the Company.


INFLATION

The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.


FORWARD-LOOKING STATEMENTS

From time-to-time, the Company or its representatives may have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission
or other regulatory agencies. Words or phrases "will likely result", "are


                                       20


<PAGE>

expected to", "will continue", " is anticipated", "estimate", "project or
projected", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). The Reform Act does not apply to initial
registration statements, including this filing by the Company. The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to maximize to the fullest extent possible the protections of
the safe harbor established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied by the following
discussion of certain important factors that could cause actual results to
differ materially from such forward-looking statements.

The risks identified here are not inclusive. Furthermore, reference is also made
to other sections of this Registration Statement that include additional factors
that could adversely impact the Company's business and financial performance.
Also, the Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, nor can it assess the impact of
all such risk factors on the Company's business or the extent to which any
factor or combination of factors may cause actual results to differ
significantly from those contained in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results.


                                       21


<PAGE>

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

The financial statements and notes thereto are attached hereto and found
immediately following the text of this Registration Statement. The audit report
of McLean Majdanski, Chartered Accountants, for the audited financial statements
for Fiscal 1999, 1998 and notes thereto are included herein immediately
preceding the audited financial statements.

(A-1) Audited Financial Statements: December 31, 1999 and December 31, 1998

Auditor's Report, dated March 27, 2000

Consolidated Balance Sheets at December 31, 1999 and December 31, 1998

Consolidated Statements of Operations for the Years Ended December 31, 1999 and
1998

Consolidated Statements of Shareholders' Deficit From Inception on June 18, 1990
Through December 31, 1999

Consolidated Statements of Cash Flows for the Years Ended December 31, 1999 and
1998

Notes to Consolidated Financial Statements


                                       22


<PAGE>
<TABLE>












CANADIAN NORTHERN LITES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998









<S>                                                                 <C>

Auditors' Report To The Shareholders                                        F-1

Consolidated Balance Sheets As Of December 31, 1999 And 1998                F-2

Consolidated Statements Of Operations For The Years Ended
   December 31, 1999 And 1998 And From Inception Through
   December 31, 1999                                                        F-3

Consolidated Statement Of Shareholders' Deficit From
   Inception Through December 31, 1999                                 F-4, F-5

Consolidated Statements Of Cash Flows For The Years Ended
   December 31, 1999 And 1998 And From Inception Through
   December 31, 1999                                                   F-6, F-7

Notes To Consolidated Financial Statements                          F-8 to F-18







                                       23


<PAGE>

                                       F-1






AUDITORS' REPORT
RE: DECEMBER 31, 1999 AND 1998
CONSOLIDATED FINANCIAL STATEMENTS
To the Shareholders of
     Canadian Northern Lites, Inc.

We have audited the accompanying consolidated balance sheets of Canadian Northern Lites,
Inc. (A Development Stage Company) as of December 31, 1999 and December 31, 1998,
the related consolidated statements of operations, shareholders' deficit and cash flows for the
years then ended and from inception 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 audits.

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

In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of Canadian Northern Lites, Inc. (A Development Stage Company)
as of December 31, 1999 and 1998 and the results of operations, changes in shareholders'
deficit and changes in cash flows for the years then ended and from inception to December 31,
1999 in accordance with generally accepted accounting principles in the United States.

The accompanying consolidated financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 1 to the financial statements,
the Company's net capital deficiency, with no mining operations to generate cash, raise
substantial doubt about its ability to continue as a going concern.  Management's plans in
regard to these matters are also discussed in Note 1.  The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

/s/McLean Majdanski

Chartered Accountants
Vancouver, B.C.
March 27, 2000
(McLean Majdanski is a joint venture of incorporated professionals)
</TABLE>

                                       24


<PAGE>
<TABLE>
                                       F- 2
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

<CAPTION>
                                                                                                         1999           1998
<S>                                                                                                <C>            <C>
ASSETS
CURRENT
   Cash (Note 8)                                                                                       $2,083        $21,029
   Canadian goods and services tax  receivable                                                          1,500          1,369
         Total current assets                                                                           3,583         22,398
INVESTMENT IN JOINT VENTURE (Note 3)                                                                        1              1
MINERAL PROPERTIES (Note 3)                                                                                 1              1
         Total assets                                                                                  $3,585        $22,400
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
CURRENT
   Accounts payable (Notes 4 and 8)                                                                   $57,552        $20,892
   Loan from shareholder (Notes 4 and 8)                                                               14,016         14,016
         Total current liabilities                                                                     71,568         34,908
PROMISSORY NOTE PAYABLE (Notes 4, 7, 8)                                                                24,841         24,841
ADVANCES FROM SHAREHOLDERS  (Notes 4 and 8)                                                           151,718        144,579
         Total liabilities                                                                            248,127        204,328
SHAREHOLDERS' DEFICIT
   Share capital (Note 6)
      Authorized
         100,000,000 shares with a par value of $.001
      Issued and outstanding
           17,211,000 shares (1998 - 17,211,000 shares)
      Par value                                                                                        17,211         17,211
      Additional paid up capital                                                                      978,231        978,231
   Deferred foreign currency translation gain (loss)                                                   (3,915)           483
   Deficit accumulated during the development stage                                                (1,236,069)    (1,177,853)
         Total shareholders' deficit                                                                 (244,542)      (181,928)
         Total liabilities and shareholders' deficit                                                   $3,585        $22,400


(See accompanying notes)
</TABLE>

                                       25


<PAGE>
<TABLE>
                                       F- 3
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH DECEMBER 31, 1999

<CAPTION>
                                                                                    Cumulative
                                                                                   Total Since
                                                                                     Inception           1999           1998
<S>                                                                                <C>               <C>           <C>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
   Exploration and development                                                         $19,885             $0             $0
   Write off of investment in joint venture (Note 3)                                    60,463              0
   Write off of development and property costs (Note 3)                                442,529              0
      Total exploration and development expenses                                       522,877              0         85,303
MARKETING EXPENSES (Note 4)
   Advertising                                                                           2,637              0              0
   Courier and postage                                                                   7,383              0              0
   Meetings                                                                              1,357              0              0
   Printing                                                                             19,056              0              0
   Promotion and entertainment                                                          16,454              0              0
   Services                                                                             58,525              0              0
   Telephone and fax                                                                    22,438              0              0
   Travel                                                                               41,305              0              0
      Total marketing expenses                                                         169,155              0              0
ADMINISTRATIVE EXPENSES (Note 4)
   Accounting and audit fees                                                            28,006         13,469          5,730
   Automobile                                                                            2,689              0              0
   Bank charges and interest (recovery)                                                  2,126            268           (449)
   Computer servicing                                                                    9,830              0              0
   Incorporation expenses written off                                                    6,794              0              0
   Insurance                                                                               836              0              0
   Interest on long term debt (Note 7)                                                   9,829          3,609          4,630
   Legal                                                                               140,172          4,149          3,625
   Management and consulting fees                                                      148,906         24,326         18,200
   Meals and entertainment                                                                  28             28              0
   Office supplies and service                                                          64,801            998          1,742
   Rent                                                                                  9,021              0              0
   SEC filing fees                                                                      10,981         10,981              0
   Telephone and fax                                                                     7,036            216              0
   Transfer agent fees                                                                   1,339            330            550
   Travel                                                                               33,990            132            594
   U.S. financial services                                                              28,339              0              0
   Wages and benefits                                                                   25,930              0          1,113
      Total administrative expenses                                                    530,653         58,506         35,735
LOSS BEFORE OTHER INCOME (LOSS)                                                     (1,222,685)       (58,506)      (121,038)
OTHER INCOME (LOSS)
   Interest income                                                                         798            290            508
   Gain (loss) on disposal of capital assets                                           (11,923)             0             26
   Gain (loss) on cash settlements of accounts payable                                  (2,259)             0          1,980
INCOME (LOSS) BEFORE INCOME TAX PROVISION                                           (1,236,069)       (58,216)      (118,524)
INCOME TAX PROVISION                                                                         0              0              0
NET INCOME (LOSS)                                                                  ($1,236,069)      ($58,216)     ($118,524)


(See accompanying notes)
</TABLE>

                                       26


<PAGE>
<TABLE>
                                       F- 4
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION ON JUNE 18, 1990 THROUGH DECEMBER 31, 1999

<CAPTION>
                                                                                                                     Deficit
                                                                                                                 Accumulated
                                                                      Common Stock                 Additional     During The
                                                         Per                                          Paid-up    Development
                                                       Share             Shares      Par Value        Capital          Stage
<S>                                                    <C>           <C>               <C>           <C>           <C>
Issuance of stock to officers, directors and
   other individuals, for an amount equal to
   part of the organization costs,
   on April 10, 1991                                   $0.10             30,000           $300         $2,700
Reorganization of capital reducing the par
   value from $.01 / share to $.001 / share                                               (270)           270
Net loss, year ended December 31, 1994
Balance, December 31, 1992, 1993 & 1994                                  30,000             30          2,970
Issuance of stock to investment banker,
   controlled by a director for services
   rendered and valued at the billed amount
   for the services                                     0.50             12,000             12          5,988
Issuance of common stock to public for cash             0.50              8,000              8          3,992
Net loss, year ended December 31, 1995
Balance, December 31, 1995                                               50,000             50         12,950
Issuance of common stock pursuant to stock
   options of which 1,220 shares were issued
   to an affiliate of the issuer for cash               0.01             50,000             50            450
Balance prior to stock split                                            100,000            100         13,400
Stock split effective April, 1996                                       300,000            300           (300)
Balance after stock split                                               400,000            400         13,100
Stock issued for acquisition of Dakota
   Mining & Exploration, Ltd. ("Dakota")
   valued at the net book value of Dakota
   at the date of acquisition                           0.01         10,000,000         10,000         59,488
Recognition of deficit accumulated during
   the development stage by Dakota up to
   the date of acquisition                                                                             78,064       ($78,064)
Issue of shares to H J S Financial Services,
   Inc. for services rendered valued at the
   market value of the shares when issued               1.28             24,000             24         30,732
Issuance of common stock to repay
   advances to Canadian Northern Lites, Inc.
   made by former directors and valued at the
   net book value of those advances which
   was less than the market value of the
   shares                                               0.15          4,000,000          4,000        596,822
Net loss, year ended December 31, 1996                                                                              (460,106)
Balance at December 31, 1996                                         14,424,000        $14,424       $778,206      ($538,170)


(See accompanying notes)
</TABLE>

                                       27


<PAGE>
<TABLE>
                                       F- 5
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FROM INCEPTION ON JUNE 18, 1990 THROUGH DECEMBER 31, 1999

<CAPTION>
                                                                                                                     Deficit
                                                                                                                 Accumulated
                                                                      Common Stock                 Additional     During The
                                                         Per                                          Paid-up    Development
                                                       Share             Shares      Par Value        Capital          Stage
<S>                                                    <C>           <C>               <C>           <C>         <C>

Balance at December 31, 1996                                         14,424,000        $14,424       $778,206      ($538,170)
Issuance of common stock for services to
   former legal counsel valued at the billed
   value for the services rendered                     $0.17            570,000            570         98,911
Fair value of donated accounting services
   provided by a former director                                                                        2,000
Net loss, year ended December 31, 1997                                                                              (521,159)
Balance at December 31, 1997                                         14,994,000         14,994        879,117     (1,059,329)
Issuance of common stock to former directors
   to repay amounts advanced by them to the
   Company and the shares are valued at the
   value of the amount owing to them                    0.12            667,000            667         82,672
Issuance of common stock to an arm's
   length supplier to repay the amount owing
   and shares valued at the fair value of
   the shares issued                                    0.06             50,000             50          2,942
Issuance of common stock to a company
   controlled by a current director to repay an
   amount owing and valued at the market
   value of the shares issued                           0.01          1,500,000          1,500         13,500
Net loss, year ended December 31, 1998                                                                              (118,524)
Balance at December 31, 1998                                         17,211,000         17,211         978,231    (1,177,853)
Net loss, year ended December 31, 1999                                                                               (58,216)
Balance at December 31, 1999                                         17,211,000         17,211         978,231    (1,236,069)
Subsequent Event
Cancellation of shares in consideration for
   the release by the Company of its 20%
   joint venture interest subsequent to
   December 31, 1999 (Notes 3 and 6)                    0.01         (2,080,000)        (2,080)         2,079
Balance, March 30, 2000                                              15,131,000        $15,131       $980,310    ($1,236,069)


(See accompanying notes)
</TABLE>

                                       28


<PAGE>
<TABLE>
                                       F- 6
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH DECEMBER 31, 1999

<CAPTION>
                                                                                    Cumulative
                                                                                   Total Since
                                                                                     Inception           1999           1998
<S>                                                                                <C>               <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                               ($1,236,069)      ($58,216)     ($118,524)
   Items not involving an outlay of cash
      Non-cash accounting services of a former director                                  2,000
      Loss (gain) on disposal of capital assets                                         11,923              0            (26)
      Write off of incorporation costs                                                     794              0              0
      Write down of investment in joint venture                                         60,463              0         60,463
      Write down of development and property costs                                     442,529              0         24,840
      Loss (gain) on cash settlements of accounts payable                                2,260              0         (1,980)
   Change in working capital items
      Canadian goods and services tax receivable                                        (1,500)          (131)        21,879
      Accounts payable increase before part of the
         balance was settled by issuing shares                                         181,993         36,660         27,309
      Net cash (used in) received from operating activities                           (535,607)       (21,687)        13,961
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock                                              151,502              0              0
   Stock issued on exercise of stock options                                               500              0              0
   Loan from shareholder                                                                14,016              0              0
   Advances from shareholders before part of the
      balance was settled by issuing shares                                            866,457          7,139          6,611
      Net cash from financing activities                                             1,032,475          7,139          6,611
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of capital assets                                                          (11,949)             0              0
   Proceeds from disposal of capital assets                                                 26              0             26
   Incorporation costs                                                                    (794)             0              0
   Mineral property payments                                                          (478,153)             0              0
      Net cash (used in) received from investing activities                           (490,870)             0             26
NET INCREASE (DECREASE) IN CASH
   (BANK INDEBTEDNESS)                                                                   5,998        (14,548)        20,598
CASH (BANK INDEBTEDNESS) AT
   BEGINNING OF YEAR                                                                         0         21,029            (52)
FOREIGN CURRENCY TRANSLATION GAIN (LOSS)                                                (3,915)        (4,398)           483
CASH (BANK INDEBTEDNESS) AT
   END OF YEAR                                                                          $2,083         $2,083        $21,029


(See accompanying notes)
</TABLE>

                                       29


<PAGE>
<TABLE>
                                       F- 7
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND FROM INCEPTION ON JUNE 18, 1990 THROUGH DECEMBER 31, 1999

<CAPTION>
                                                                                    Cumulative
                                                                                   Total Since
                                                                                     Inception           1999           1998
<S>                                                                                   <C>                  <C>      <C>
SUPPLEMENTAL SCHEDULE OF NONCASH
   INVESTING AND FINANCING ACTIVITIES

Reverse Take-Over
The Company had a reverse takeover in which the following
   net assets were acquired in exchange for assumption
   of the shareholders' equity of the acquiring company
      Net assets acquired                                                              $87,408
      Liabilities assumed                                                              $17,920
      Shareholders' equity assumed
         Share capital, par value                                                       10,000
         Share capital, additional paid up capital                                     137,552
         Accumulated deficit during the development stage                              (78,064)
            Total shareholders' equity                                                  69,488
            Total liabilities and shareholders' equity                                 $87,408

Shares Issued to Repay Current and Long Term Debt
   Par value                                                                            $6,853             $0         $2,217
   Additional paid up capital                                                          834,537              0         99,114
   Total                                                                              $841,390             $0       $101,331
Debt repaid
   Accounts payable                                                                   $124,391             $0        $17,992
   Advances from shareholders                                                          714,739              0         85,319
   Gain on settlement of debt                                                            2,260              0         (1,980)
   Total debt repaid                                                                  $841,390             $0       $101,331

Purchase of Property with  Promissory Note
   Promissory note payable issued for property                                         $24,841             $0        $24,841


(See accompanying notes)
</TABLE>

                                       30


<PAGE>
<TABLE>
                                       F- 8
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


1. BASIS OF PRESENTATION FOR A COMPANY IN THE DEVELOPMENT STAGE

   The Company was first incorporated in the State of Nevada on June 18, 1990 as
   QQQ-Huntor Associates, Inc.  On July 21, 1995, the Company changed its domicile to the State
   of Texas and merged into a Texas Corporation, Unimex Transnational Consultants, Inc.  On
   April 26, 1996, the Company reorganized and acquired all the issued and outstanding stock
   of Dakota Mining & Exploration Ltd. ("Dakota") for 10,000,000 shares of the Company's
   common stock, and changed the name of the Company to Canadian Northern Lites, Inc.
   As a result of that transaction, Dakota became a legal subsidiary of the Company.  However,
   as stated below, Dakota is the acquirer in the consolidated financial statements.

   As a result of the transaction in which the Company acquired all the outstanding shares of
   Dakota, the group of shareholders that owned Dakota held 10,000,000 shares of the
   Company which was more than 50% of the voting shares at that time.  This resulted in
   the transaction being accounted for as a "reverse take-over" in the consolidated financial
   statements which means that Dakota is the acquirer.   Accordingly, the consolidated
   financial statements are a continuation of the Dakota financial statements, translated into
   U.S. Dollars.  The transaction was recorded at the historical cost of the net assets of
   Canadian Northern Lites because it represented a recapitalization of Dakota.  The $3,050
   deficit of the legal parent as at the date of the reverse take-over is eliminated on
   consolidation such that the consolidated deficit reflects the deficit of Dakota at the date
   of acquisition, $78,064, plus the results of operations of Dakota and Canadian Northern
   Lites, Inc., since the acquisition.

   The cumulative statements of operations, cash flows and deficit accumulated during the
   development state reflect the translated balances of Dakota from inception.  The cumulative
   balance for office supplies and service is net of $20,340 of consulting revenue, received
   by Dakota in 1994, because the revenue was incidental to the development stage.

   Dakota was incorporated on January 12, 1994 under the Company Act of British
   Columbia and changed its name to Dakota Mining & Exploration Ltd. from Eagle Ridge
   Manufacturing Ltd. on July 27, 1995.  The Company's purpose is to explore and develop
   mining properties in Canada.  Dakota is in the development stage because its
   activities have consisted of the purchase of interests in mining properties and some
   exploration and development.  Dakota has not yet developed any mining properties into a
   producing mine nor has it earned revenue from any of its properties.

   As at December 31, 1999, both the Company and Dakota do not have sufficient cash
   to cover current liabilities.  Future activities require cash being provided to the Company
   by investors or lenders.  As stated in Note 5, companies controlled by the president of


                                       31


<PAGE>

                                       F- 9
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


1. BASIS OF PRESENTATION FOR A COMPANY IN THE DEVELOPMENT STAGE
   (Continued)

   the Company are currently funding, and plan to continue to fund, the administrative
   expenses incurred by the Company.  In addition, these related parties do not currently
   intend to receive cash for the management fees of $2,000 per month that they charge
   the Company.  These efforts are part of a long range strategy to restructure the Company's
   affairs, arrange for new long term financing and continue to locate and develop income
   producing properties.

   The financial statements are prepared on the assumption that the entity is a going concern,
   meaning it will continue in operation for the foreseeable future and will be able to realize its
   assets and discharge its liabilities through the normal course of operations.  Because the
   Company has no cash and has not yet developed any producing mines, its ability to realize
   assets and discharge its liabilities through the normal course of its operations is dependent
   on continued funding from companies controlled by the president, the receipt of additional
   funds from investors and the establishment of successful operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   (a)Basis Of Consolidation

      As stated in Note 1, the consolidated financial statements include the accounts of
      Dakota Mining & Exploration Ltd., the designated acquirer in the reverse take over
      transaction, and Canadian Northern Lites, Inc.  The investment in the Ewer/Klinker
      mineral properties joint venture was accounted for on the cost basis because the
      joint venture had not commenced operating and had not provided any financial
      information due to a dispute between the joint venture partners.

   (b)Fiscal Year

      The parent company, Canadian Northern Lites Inc., has a fiscal year end of
      December 31.  The subsidiary company, Dakota, has a fiscal year end of January 31.
      These consolidated financial statements have been prepared using the December 31
      financial statements of the legal parent, and the January 31 financial statements of the
      subsidiary.  There were no intervening events that materially affect the consolidated
      financial position or the consolidated results of operations and cash flows for the
      fiscal periods presented.


                                       32


<PAGE>

                                       F- 10
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   (c)Use Of Estimates

      Preparation of financial statements in conformity with generally accepted accounting
      principles requires management to make estimates and assumptions.  These estimates
      or assumptions affect reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and reported
      amounts of expenses and gains during the reporting periods.  Actual results could
      differ from estimates.

   (d)Foreign Currency Translation Gain

      The foreign currency translation gain relates to translating the Canadian dollar financial
      statements of the wholly owned legal subsidiary into US dollars.  This amount is not
      included in the statement of operations because the gains relate to translating from the
      functional currency of the subsidiary into the reporting currency of the legal parent.
      Instead, the exchange adjustment is recorded as a component of shareholders' deficit.

   (e)Canadian Goods And Services Tax Receivable

      The Canadian Goods And Services Tax is a seven percent tax charged on most goods
      and services rendered in Canada.  Commercial enterprises are required to charge the
      tax on the goods and services it sells.  This tax is then reduced for any taxes that are
      paid on goods and services purchased.  Because the Company is a development
      stage enterprise, it has not yet provided goods and services that would be subject to
      the tax and therefore it is entitled to a refund of taxes paid.

      The Canadian Goods And Services Tax receivable is recorded when the expenditures,
      which give rise to the refundable tax, are recorded in the financial statements.

   (f)Mineral Properties

      Mineral properties are recorded at cost.  In the event that one of the properties
      commences production, it will be depleted on a unit-of-production basis over the
      proven, developed reserves of the property.  To date, no properties have commenced
      commercial production.


                                       33


<PAGE>

                                       F- 11
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   (f)Mineral Properties (Continued)

      The carrying values of the properties are reviewed for possible impairment whenever
      events or changes in circumstances indicate.  Change in management is one
      circumstance in which the carrying values of all properties are reviewed to determine
      if there has been any impairment in the carrying value.

      The cost of properties that are abandoned are written off in the year the decision to
      make no further expenditures on the property is made.  When impairment is
      indicated, the carrying amounts of assets are written down to fair value, usually
      determined on the basis of a consulting geologist report.  In the absence of such a
      report, the properties are written down to a nominal value of $1.00.

   (g)Nonmonetary Transactions

      Nonmonetary transactions in which shares were issued to pay for services rendered
      or to repay an amount owing are valued at the billed amount for the services or the
      principal amount of the debt owing if bills are rendered or cash is advanced.  If specific
      billings are not presented, then the transactions are valued at the trading price of
      publicly traded shares on the date the new shares were issued.

   (h)Donated Services

      The fair value of services donated to the Company are expensed or capitalized and
      treated as a contribution of capital.  If the fair value of the services is considered
      immaterial, then no amount is recorded.

   (i)Related Party Transactions

      Related parties include current and former directors and officers and those entities that
      hold more than 5% of the shares.  The Company discloses all transactions, other than
      those in the ordinary course of business, with these related parties.

      Assets acquired from significant shareholders are recorded at the net book value to
      the shareholder and the difference between the purchase price and cost is treated as a
      reduction or increase in paid up capital.    In the case of the 1998 property acquisition, the
      significant shareholder reduced the price and amount of the promissory note to the
      net book value of the property.


                                       34


<PAGE>

                                       F- 12
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

   (j)Income Taxes

      The Company utilizes the liability method of accounting for income taxes.  Deferred
      income taxes are determined based on the estimated future tax effects of
      differences between the financial and tax bases of assets and liabilities given the
      provision of the enacted tax laws.  The Company is a development state enterprise
      and accordingly has not commenced operations that would generate taxable income.
      For that reason, the Company has a valuation reserve equal to the amount of the
      deferred income tax assets and has no net provision for income tax recovery in its
      consolidated statements of operations.

   (k)Development Stage Enterprise

      The Company is a development stage enterprise that presents its financial statements
      in conformity with the generally accepted accounting principles that apply to established
      operating enterprises.  As such, the Company charges all exploration, marketing and
      administrative expenses to operations in the year they occur.  The Company capitalizes
      only those costs that it expects to recover through future operations and those costs
      are subject to a regular review for possible impairment.

      As a development state enterprise, the Company discloses the deficit accumulated
      during the development stage and the cumulative statement of operations and cash
      flows from inception of the designated acquirer, Dakota Mining & Exploration, Ltd.
      and from the date of acquisition of Canadian Northern Lites, Inc., the designated
      subsidiary.

3. MINERAL PROPERTIES AND INVESTMENT IN JOINT VENTURE

<CAPTION>
                                                                                                         1999           1998
<S>                                                                                                        <C>            <C>
   Investment in joint venture (Ewer/Klinker properties)                                                   $1             $1

   Investment in mineral properties (Way I, Banjo I & II)                                                  $1             $1

   (a)Ewer/Klinker Mineral Properties

      On April 10, 1996, the Company entered into an agreement which was an Option To
      Purchase certain mineral claims, located near Vernon, British Columbia, from a Vernon
      mining company.  This agreement was pursuant to a Letter Of Intent between the
      Vernon mining company and the Company that was signed in January, 1996.
      The payments made to the Vernon company pursuant to the Letter Of Intent in January,
      1996 are reflected as an asset in the 1996 financial statements.  The Company paid
      $64,000 prior to the agreement and $411,000 pursuant to the agreement.
      These funds were advanced to the Company by individuals, who were directors and
      shareholders at the time. These advances were eventually repaid by issuing


</TABLE>

                                       35


<PAGE>
<TABLE>
                                       F- 13
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


3. MINERAL PROPERTIES AND INVESTMENT IN JOINT VENTURE (Continued)

   (a)Ewer/Klinker Mineral Properties (Continued)

      4,000,000 shares having a total par value of $4,000 and additional share capital
      of $596,822 as noted in the consolidated statement of shareholders' deficit.

      This option agreement originally gave the Company an option to acquire a 100%
      interest in the property but that option expired unexercised on January 15, 1998 and a
      joint venture was then created.  The Company received a 20% joint venture interest in
      the mineral claims and the Vernon mining company had the remaining 80% interest.

      In 1997, the mineral property was written down to its estimated net realizable value
      of $60,464 based on the "worst case" estimate determined by a consultant geologist.
      This write down was initiated by the new management after the review of the geologist's
      report and after protracted negotiations with the joint venture partner to attempt to
      settle the unresolved legal matters.

      In 1997, the Joint Venture Partner filed a statement of claim in the Supreme Court of
      British Columbia alleging that an amount of $29,847 (Cdn$46,860) was due for work done,
      goods supplied and accounts incurred and that claim was disputed by the Company.

      In 1998, the mineral property became an investment in a joint venture and was written
      down to a value of $1.00 because of continued protracted negotiations with the joint
      venture partner meant the Company had no access to information to make an updated
      valuation of the property based on discounted cash flows and had no information to
      assess the 80% joint venture partner's ability to fund the mining operations.

      Subsequent to December 31, 1999, the Company reached a formal agreement with
      the former Joint Venture Party to return its 20% interest in the joint venture in exchange
      for the Joint Venture Party returning 2,080,000 shares of the Company back to the
      Company and releasing the Company from any claim arising from the Option agreement
      or the British Columbia Supreme Court Action.  The Consent Dismissal Order has now
      been filed and the shares have now been returned.

   (b)Way1, Banjo I & II Mineral Properties

      The Company purchased mineral properties from a company controlled by a
      significant shareholder, who is also a director, for a price of $50,000 ($78,500 Cdn)
      and the purchase was paid with a promissory note as disclosed in Notes 4(f) and 7.
      There is no independent appraisal supporting the value of the property, nor was any
      other detailed analysis done to determine the value.  Instead, the directors arbitrarily
      set the value after considering the consulting geologist's report on neighbouring
      properties referred to in Note 3(a) and the possible strategic role of this assembly
      of properties in a larger development.

      Because this asset was purchased from a significant shareholder, the asset was
      recorded at the shareholder's net book value of $24,841 and the difference of


                                       36


<PAGE>

                                       F- 14
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


3. MINERAL PROPERTIES (Continued)

   (b)Way1, Banjo I & II Mineral Properties (Continued)

      $25,159 has been treated as a reduction of the note payable with the approval of
      the significant shareholder.

      In 1998 the property was written down to $1.00 to recognize the company's inability
      to prepare an updated valuation on the property owned in the joint venture which is
      adjacent to this property.  This property  was purchased as a possible strategic role as
      part of a larger development incorporating the joint venture property.

4. RELATED PARTIES

   (a)Loan From Shareholder

      This amount due to a shareholder bears interest at 18% per annum and was due July 1,
      1998.  In the event the loan is paid in full on or before July 1, 1998, the interest rate
      is reduced to 10% per annum from the date of advancement of the funds to the date
      of payment.  Because this loan was still outstanding at December 31, 1999, interest has
      been accrued at 18% per annum.

   (b)Advances From Shareholders

      The amount due to the shareholders is unsecured, non-interest bearing and has no
      specific terms of repayment.  Some of these amounts are reflected as a long term
      liability because the shareholders, who advanced the balances, have agreed that
      they will not request a cash payment of any of the balances outstanding nor settle
      any advances in exchange for the issuance of shares for at least one year from the
      balance sheet date.

   (c)Management Fees

      Management fees of $39,723 in fiscal 1997 and $36,670 in fiscal 1996 were charged
      to the Company by a former director.  Commencing in fiscal 1998, management fees
      of $2,000 per month, for a total of $24,000 (1998 - $18,200), are charged
      by companies controlled by the president of the Company.  Since that time, these
      companies have been funding the administrative expenses of the Company and its
      parent.  Accounts payable as at December 31, 1999 includes $30,651
      (1998 $14,065) payable to these related parties.


   (d)Accounting Services

      Accounting services were provided by a former director and shareholder of the
      Company.  No fees were paid for these services.  There is a $2,000 charge to


                                       37


<PAGE>

                                       F- 15
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


4. RELATED PARTIES (Continued)

   (d)Accounting Services (Continued)

      operations for the fair market value of these services offset by a contribution to
      capital of the same amount.

   (e)Other Expenses

      Most other marketing and administrative expenses were reimbursements to former
      directors and officers for expenses incurred in their efforts to develop the Company's
      business.

   (f)Purchase Of Mineral Properties From A Shareholder Who Is Also A Director

      The Company committed to purchase mineral properties from a company controlled by
      a significant shareholder, who is also a director, for a price of $50,000 and the
      purchase was paid for by issuing a $50,000 promissory note. See Notes 3(b) and 7.
      The property was recorded at the $24,841 cost to the significant shareholder and the
      principal of the note payable was reduced by the significant shareholder from $50,000
      to $24,841.

5. INCOME TAX

   (a)Income Tax Provision

      The Company is in the development stage and has not yet earned any revenue or income.
      No provision for additional income tax recovery is recorded by the Company due to its
      history of losses indicating that, more likely than not, none of the deferred income tax
      assets will be realized.

   (b)Effective Income Tax Rate

      Because the Company has not yet earned any revenue or income, it has an effective tax
      rate of zero per cent.  The rate used to estimate the deferred income tax assets in Note 5(d)
      below is 45.6%, the combined Canadian federal and British Columbia provincial tax rate.

   (c)Losses Available For Deduction  Against Future Taxable Incomes

      In addition to the Canadian development expense referred to in Note 5(d) below, the
      Company has losses available for deduction against future Canadian taxable
      incomes until the years indicated as follows:


                                       38


<PAGE>

                                       F- 16
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


5. INCOME TAX (Continued)

   (c)Losses Available For Deduction  Against Future Taxable Incomes (Continued)

<CAPTION>
<S>                                                                        <C>        <C>
             Expiry years:                                                 2003        $93,412
                                                                           2004        387,749
                                                                           2005         97,217
                                                                           2006         28,591
                                                                           2007         54,464
                                                                                      $661,433
</TABLE>

<TABLE>
   (d)Deferred Income Tax Assets

<CAPTION>
                                                                                                         1999           1998
<S>                                                                                                  <C>            <C>
      Canadian development expense, the cost of any rights
      to prospect, explore, drill or mine for mineral available for
      deduction against future income, in excess of the
      carrying value of the mineral properties                                                       $211,100       $211,100
      Net operating loss carryforwards                                                                296,100        276,800
      Net deferred income tax assets                                                                  507,200        487,900
      Valuation allowances to recognize the Company's history of
         losses and absence of any profits to date                                                   (507,200)      (487,900)
      Net deferred income tax assets                                                                       $0             $0

6. SHARE CAPITAL

   (a)Net Earnings (Loss) Per Share

                                                                                                         1999           1998

      Net earnings (loss)                                                                            ($58,216)     ($118,524)
      Common shares issued
         Average outstanding shares                                                                17,211,000     17,211,000
      Net earnings (loss) per share                                                                     $0.00         ($0.01)

      There are no outstanding options so fully diluted net earnings (loss) per share are not
      provided.


</TABLE>

                                       39


<PAGE>
<TABLE>
                                       F- 17
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


6. SHARE CAPITAL (Continued)

   (b)Cancellation Of Shares - Subsequent Event

      Subsequent to the year end, the Company received 2,080,000 previously issued shares from the
      former joint venture partner as part of a settlement of a dispute referred to in Note 3(a).  The Company
      cancelled the shares and wrote off the reduction in par value against the remaining $1 net
      book value of the investment in joint venture and the balance against additional paid up capital.
      The impact of the transaction on the financial statements is as follows:

<CAPTION>
                                                                                                                     Balance
                                                                                       Balance                         After
                                                                                      December     Subsequent     Subsequent
                                                                                      31, 1999          Event          Event
<S>                                                                                   <C>             <C>           <C>
      Impact On Balance Sheet
         Investment in joint venture                                                        $1            ($1)            $0
         Share Capital
               Par value                                                               $17,211        ($2,080)       $15,131
               Additional paid up capital                                              978,231          2,079        980,310
                                                                                      $995,442            ($1)      $995,441

7. PROMISSORY NOTE

   To purchase the mineral properties discussed in Note 3(b), the Company issued a $50,000
   promissory note, due on demand, to a company that is a major shareholder of Canadian
   Northern Lites, Inc. and whose controlling shareholder is the president and a director
   of Canadian Northern Lites, Inc.  This note requires interest at 8% per annum.  The holder
   of the note reduced the principal to $24,841, as explained in Note 3(b), and has committed
   to not request a payment of principal for at least one year from the balance sheet date.

8. FINANCIAL INSTRUMENTS

   (a)Fair Value

      The Company's financial instruments consist of cash, accounts payable, loan from
      shareholder, promissory note payable and advances from shareholders.  Unless
      otherwise stated, the fair values of these financial instruments, except for the
      advances from shareholders, approximate their carrying values.  No interest is
      charged or paid on the advances from shareholders and they are not expected
      to be paid soon, so the fair values are less than their carrying values.

      No estimate was made of the fair value of the advances from shareholders because
      the expected maturity of the instruments is unknown.  While the shareholders who
      made the advances have committed not to request payment for at least a year, the
      Company is a development stage enterprise without any current means of repaying
      the amounts owing.   As indicated in Note 1, there is a great deal of uncertainty as
      to when, or if, the Company will have the means to pay the amounts owing.  A further


</TABLE>

                                       40


<PAGE>
<TABLE>
                                       F- 18
CANADIAN NORTHERN LITES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998


8. FINANCIAL INSTRUMENTS (Continued)

   (a)Fair Value (Continued)

      degree of uncertainty is created if the Company and the shareholders agree to
      settle the debt by issuing more shares because the future market value of those
      shares is unknown.

   (b)Foreign Currency Risk

      The Company has cash, goods and services tax receivable and accounts payable from
      purchases in Canada.  As a result, the Company is exposed to foreign exchange rate
      fluctuations.   The exposure to foreign currency is mitigated by the fact that the cash and
      goods and services tax receivable partially offset the accounts payable balance.

      The following are the balances at December 31, 1999:

<CAPTION>
                                                                                     Canadian$    Translation            US$
<S>                                                                                     <C>           <C>             <C>
      Cash                                                                              $3,011          ($928)        $2,083
      Goods and services tax receivable                                                  2,169           (669)         1,500
      Accounts payable                                                                  83,199        (25,647)        57,552

   (c)Interest Rate Risk

      As the interest rates are fixed on the loan from shareholder and the promissory note
      payable, the Company is not exposed to interest rate risk.


</TABLE>

                                       41


<PAGE>
<TABLE>
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE
---------------------------------------------------------

Not Applicable


                                     PART III


ITEM 9  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
--------------------------------------------------------------------

The following table lists as of March 15, 2000 the names of the Directors of the
Company. The Directors have served in their respective capacities since their
election and/or appointment and will serve until the next Annual Shareholders'
Meeting or until a successor is duly elected, unless the office is vacated in
accordance with the Articles/By-Laws of the Company.  All Directors are
residents and citizens of Canada.


                                    Directors

<CAPTION>
                                                             Date
                                                            First
                                                          Elected
Name                                    Age          or Appointed
------------------                      ---          ------------
<S>                                      <C>            <C>
Terry G. Cook (1)<F1>                    50             May  1998
Larry Low                                36             May  1998
Cam Dalgliesh (1)<F1>                    54             May  1998
<FN>
<F1>
(1)  Member of Audit Committee.
</FN>

The following table lists, as of March 15, 2000, the names of the Executive
Officers of the Company. The Executive Officers serve at the pleasure of the
Board of Directors.  All Executive Officers are residents/citizens of the
Canada.


                               Executive Officers

<CAPTION>
Name               Position      Date of Board Approval
---------------    ----------    ----------------------
<S>                <C>                  <C>
Terry G. Cook      President            May  1998
Cam Dalgliesh      Secretary            May  1998


BUSINESS EXPERIENCE

Terry G. Cook. Mr. Cook is President and a Director of the Company. He has been
employed by the Company since May 1998. His responsibilities include
coordinating strategy and planning. Mr. Cook is a graduate of Harvard
Business School where he received an MBA in 1974. Since 1978 he has been the
President and a Director of Westridge Capital Inc., a management and investment
company located in Vancouver, British Columbia. Mr. Cook has over 20 years
experience in creating and building small and medium sized businesses and real
estate ventures as a result of his work with Westridge Capital Inc.


                                       42
</TABLE>

<PAGE>

Cam Dalgliesh. Mr. Dalgliesh is Secretary and a Director of the Company. His
responsibilities include assisting Mr. Cook in general administration of the
Company and planning. Mr. Dalgliesh is a graduate of the University of Alberta.
He is an independent businessman with experience in several small and medium
sized businesses, including Factory Direct Sports Ltd. a Canadian based direct
marketing company which markets all types of sporting goods.

Larry Low. Mr. Low is a Director of the Company. His responsibilities include
assisting both Mr. Cook and Mr. Dalgliesh in the planning process for the
Company. Mr. Low is a graduate of the University of British Columbia. He has
been employed by the CGI Group Inc. as an information technology consultant
since 1997. The CGI Group Inc. is an international information technology firm
based in Montreal, Quebec with an office in Vancouver, British Columbia.


INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

Other than that described above, there have been no events during the last five
years that are material to an evaluation of the ability or integrity of any
director, person nominated to become a director, executive officer, promoter or
control person including:

a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;

b) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);

c) being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;

d) being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.


FAMILY RELATIONSHIPS

There are no family relationships between any of the officers and/or directors.


OTHER RELATIONSHIPS/ARRANGEMENTS

There are no arrangements or understandings between any two or more Directors or
Executive Officers, pursuant to which he/she was selected as a Director or
Executive Officer. There are no material arrangements or understandings between
any two or more Directors or Executive Officers.


                                       43


<PAGE>
<TABLE>
ITEM 10  EXECUTIVE COMPENSATION
-------------------------------

The Company has no formal plan for compensating its Directors for their service
in their capacity as Directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any Director undertaking any special services on
behalf of the Company other than services ordinarily required of a Director.
During Fiscal 1999, no Director received and/or accrued any compensation for his
services as a Director, including committee participation and/or special
assignments.

The Company has no material bonus or profit sharing plans pursuant to which cash
or non-cash compensation is or may be paid to the Company's Directors or
Executive Officers. The Company has no stock option or other long-term
compensation program.

During 1999, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.

The Company has no plans or arrangements in respect of remuneration received or
that may be received by Executive Officers of the Company in Fiscal 1999 to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds
$60,000 per Executive Officer.

The Company has no written employment agreements.

Beginning on May 1, 1998 management fees payable to a company controlled by
Terry Cook, President of the Company, have been accrued by the Company at
$2000/month for management services.

Other than that disclosed above, no compensation was paid during Fiscal 1999 to
any of the officers or directors of the Company to the extent that they were
compensated in excess of $60,000.


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

The Registrant is a publicly-owned corporation, the shares of which are owned by
United States and Canadian residents. The Registrant is not controlled directly
or indirectly by another corporation or any foreign government.

The following table lists as of March 15, 2000 all persons/companies the
Registrant is aware of as being the beneficial owner of more than five percent
(5%) of the common stock of the Registrant.


                                 5% Shareholders

<CAPTION
Title                              Amount and Nature Percent
  of                               of Beneficial     of
Class   Name of Beneficial Owner   Ownership         Class #<F1>
------  ------------------------   ----------------- -------
<S>     <C>                          <C>              <C>
Common  Terry G. Cook (1)<F2>        1,686,000        9.79%
Common  William E. Gould             1,480,000        8.59%
Common  Myron Kinach                 1,475,000        8.57%
Common  William Lumley               1,440,000        8.36%

  TOTAL                              6,081,000       35.33%
<FN>
<F1>
#  Based on 17,211,000 shares outstanding as of March 15, 2000.
<F2>
1.       1,500,000 of these shares are restricted pursuant to Rule 144
</FN>

                                       44
</TABLE>

<PAGE>
<TABLE>
The following table lists as of March 15, 2000 all Directors and Executive
Officers who beneficially own the Registrant's voting securities and the amount
of the Registrant's voting securities owned by the Directors and Executive
Officers as a group.


                Shareholdings of Directors and Executive Officers

<CAPTION>
Title                                 Amount and Nature Percent
  of                                      of Beneficial      of
Class   Name of Beneficial Owner              Ownership Class #<F1>
------ ----------------------------------- ------------ -------
<S>    <C>                                    <C>         <C>
Common Terry G. Cook, President & Director    1,686,000   9.79%
Common Larry Low, Director                            0    0.0%
Common Cam Dalgliesh, Secretary & Director            0    0.0%

        Total                                 1,686,000  9.79%(1)
<FN>
<F1>
#  Based on 17,211,000 shares outstanding as of March 15, 2000.
</FN>

ITEM 12  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

Current management is unaware of any transactions since May 1998, or proposed
transactions, which have materially affected or will materially affect the
Company in which any Director, Executive Officer, or beneficial holder of more
that 10% of the outstanding common stock, or any of their respective relatives,
spouses, associates or affiliates has had or will have any direct or material
indirect interest other than those described below. Management believes that all
transactions with affiliated parties have been on terms at least as favorable to
the Company as the Company could have obtained from unaffiliated parties.

On May 5, 1998, the Company purchased the Way 1, Banjo 1 and Banjo 2 claims from
456786 B.C. Ltd. a company controlled by the President of Canadian Northern
Lites, Inc., Terry G. Cook.


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

The Company did not file any Current Reports on Form 8-K during the quarter
ended December 31, 1999.


SIGNATURES
----------

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


CANADIAN NORTHERN LITES, INC.


By: /s/ Terry G. Cook
_______________________________
Name:  Terry G. Cook
Title: President
March 31, 2000


                                       45
</TABLE>

<PAGE>

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


Signature Title Date


By: /s/ Terry G. Cook
_______________________________
Name:  Terry G. Cook
Title: President
March 31, 2000



/s/ Cam Dalgliesh
_______________________________
Cam Dalgliesh
Director and Secretary
March 31, 2000



/s/ Larry Low
_______________________________
Larry Low
Director
March 31, 2000


                                       46