UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549 Form 10-KSB/A No. 1 (Mark One)[X]
        ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
            ACT OF 1934For the fiscal year ended:  March 31, 2001[  ]
        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
            ACT OF 1934Commission file number: 0-30193
  NATION ENERGY, INC. 
 (Name of Small Business Issuer in its Charter) Delaware
        
        59-2887569(State or other jurisdiction of
        
        (I.R.S. Employer Identification No.)incorporation or organization)Suite 1100 - 609 West Hastings StreetVancouver BC Canada V6B 4W4
        
        N/A(Address of principal executive offices)
        
        (Zip Code)
 Issuer's telephone number: (800) 400-3969 
    Securities registered pursuant to Section 12(b) of the Act: Title of each class
        
        Name of each exchange on whichto be so registered
        
        each class is to be registeredN/A
        
        N/A
  -1-  Securities registered pursuant to Section 12(g) of the Act:

  Common Stock, $0.001 par value per share

  

  (Title of Class)

  Check whether the registrant (1) filed all reports required to be filed by
    Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
    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 [ ]

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
    405 of Regulation S-B is not contained herein, and will not 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. [  ]

  The issuer had no revenues for the fiscal year ended March 31, 2001.

  The aggregate market value of the common stock held by non-affiliates of the
    registrant at June 26, 2001, was approximately $4,083,352 based on the closing
    price for the common stock on the OTC Bulletin Board on that date. At June
    26, 2001, 11,020,000 shares of registrant's common stock were outstanding.

  This Form 10-KSB incorporates by reference the issuer's amended Consent Solicitation
    Statement on Schedule 14A which was filed on June 28, 2001 and all subsequent amendments thereto (incorporated by
    reference in "DESCRIPTION OF THE BUSINESS--SALE OF INTERESTS TO VRD").

  Transitional Small Business Disclosure Format (check one): Yes [ ]  
    No  [X]

  This Form 10-KSB contains forward-looking statements. These statements include
    statements regarding our plans, goals, strategies, intent, beliefs or current
    expectations. These statements are expressed in good faith and we believe
    had a reasonable basis when expressed, but there can be no assurance that
    these expectations will be achieved or accomplished. Sentences in this document
    containing verbs such as "plan," "intend," "anticipate,"
    "target," "estimate," "expect," etc., and/or
    future-tense or conditional constructions ("will," "may,"
    "could," "should," etc.) constitute forward-looking statements
    that involve risks and uncertainties. Items contemplating, or making assumptions
    about, actual or potential future sales, market size, collaborations, trends
    or operating results also constitute such forward-looking statements. These
    statements are only predictions and actual results could differ materially.
    Certain factors that might cause such a difference are discussed throughout
    this Form 10-KSB including the section entitled "Risk Factors" beginning
    on page 10 of this document. Any forward-looking statement speaks only as
    of the date we made the statement, and we do not undertake to update the disclosures
    contained in this document or reflect events or circumstances that occur subsequently
    or the occurrence of unanticipated events.

  -2-NATION ENERGY, INC.

  FORM 10-KSB/A

  TABLE OF CONTENTS

  PART IItem 1.
        Description of BusinessItem 2.
        Description of PropertyItem 3.
        Legal ProceedingsItem 4.
        Submission of Matters to a Vote of Security HoldersPART IIItem 5.
        Market for Common Equity and Related Stockholder MattersItem 6.
        Management's Discussion and AnalysisItem 7.
        Financial StatementsItem 8.
        Changes in and Disagreements With Accountants on Accounting and Financial
            DisclosurePART IIIItem 9.
        Directors, Executive Officers, Promoters and Control Persons; Compliance
            with Section 16(a) of the Exchange ActItem 10.
        Executive CompensationItem 11.
        Security Ownership of Certain Beneficial Owners and ManagementItem 12.
        Certain Relationships and Related TransactionsItem 13.
        Exhibits and Reports on Form 8-K

  

  -3-PART I

  ITEM 1. DESCRIPTION OF BUSINESS

  THE COMPANY

  Nation Energy, Inc. ("Nation Energy" or the "Company") is an exploration
    stage company. It was formed under the laws of the state of Florida on April
    19, 1988 under the name Excalibur Contracting, Inc. and from that date until
    September 1998 it conducted no business and existed as a shell corporation.
    After the reinstatement of the Company's Articles of incorporation on September
    16, 1998, the Company's main focus has been the procurement of mineral leasehold
    interests, primarily oil and gas exploitation rights. The Company reincorporated
    as a Delaware corporation on February 2, 2000 and changed its name to Nation
    Energy, Inc. on February 15, 2000. Pursuant to its recent focus, the Company
    has commenced corporate strategic development whereby the Company has been
    exploring potential oil and gas projects. Though the Company has reviewed
    its potential participation in several oil and gas projects in the Rocky Mountain
    region it has entered into only one agreement as of this date for the exploration
    of oil and gas properties.  This agreement is the Joint Operating Agreement
    with Saurus Resources, Inc. dated December 1, 1999 which was attached as an
    exhibit to Nation Energy's Form 10-SB filed with the Securities and Exchange
    Commission on March 31, 2000 and was described in detail in that filing.

  ACTIVITIES UNDER THE AGREEMENT WITH SAURUS RESOURCES

  The Company holds interests in 28 oil and gas leases located in the Greater
    Trona Area prospect, located in and around Sweetwater County, Wyoming. 
    These leases cover approximately 22,000 acres.   See "DESCRIPTION
    OF PROPERTY."   Under the Joint Operating Agreement, Saurus Resources
    is the operator of oil and gas exploration on the property covered by these
    leases and has certain rights and duties as the operator.  The agreement
    states the initial ownership interests of the parties in the covered leases,
    specifies procedures for confirming and adjusting the interests of the parties
    and sets forth agreements concerning future acquisitions or transfers of interests
    of the leases.  The agreement also has provisions that allow a party
    to propose the drilling of a well on properties covered by the covered leases
    and allow the other party to elect whether or not to participate in the proposed
    drilling.  If a party elects to not pay its share of the cost of drilling
    a proposed well, such non-participating party must surrender to others who
    do participate in the proposed well all of the revenue attributable to its
    nominal ownership interest in the well until the participating party has recouped
    from net revenues otherwise due to the non-participating party 300% of the
    cost of the well attributable to the non-participating party's interest. 
    The agreement also provides rules for managing the production, maintenance
    and abandonment of wells drilled on the covered leases, has provisions that
    specify the liability of the parties for various expenses and expenditures
    for or related to operations on the covered leases and sets forth various
    procedures for operations on the covered leases and making decisions under
    the agreement.

  -4-The Company's only material activities to date have been related to its participation
    in exploration conducted under the Joint Operating Agreement with Saurus Resources. 
    To date, 24 test wells have been drilled and completed under this agreement. 
    Costs per well have exceeded by four times or more the original estimate of
    $35,000 per well.  Nation Energy has advanced a total of approximately
    $2,167,000 under its agreement with Saurus Resources.  Operational difficulties
    in developing the test wells are largely responsible for the greater operating
    costs experienced.  These difficulties include mineral precipitation
    in the well bore, which inhibits production.  The wells drilled to date
    have been perforated and hydraulically fractured; these geophysical traits
    make extraction of gas much more complicated and expensive than anticipated. 
    Poor weather and lack of available crews have also contributed to operational
    difficulties and greater expenses. Despite the significantly greater exploration
    expenditures, there are no strong indications to date that the test wells
    or other potential wells within the interests held by Nation Energy will produce
    sufficient gas to be able to recover the exploration costs expended to date,
    let alone be profitable.

  Nation Energy's management has reviewed analyses of the open hole logs and
    mud logs of the wells drilled to date and concluded that there is no evidence
    that the wells contain sufficient gas to prove economically viable.  Both
    the open hole logs (which reveal porosity and electric resistivity, both of
    which are indicators of production potential) and the mud logs are inconclusive. 
    The electric resistivity logs indicate that permeability, a measure of production
    capacity, is very low in the test wells.  The mud logs indicate small
    amounts of gas to be present each time a drill pipe connection is made but
    there is no indication that any particular depth is likely to be productive. 
    While there are indications that gas is present, permeability and pressure
    are so low that it is doubtful that economic amounts of gas could be extracted.

  Production testing of the Trona Area project has been complicated by the precipitation
    of sodium carbonate in the test wells.  This precipitation is the result
    of geological conditions in the Trona area and has resulted in plugged tubing
    in the test wells.  As a result there has been no flow testing that has
    lasted for more than a few days before operations were shut down. Attempts
    were made to clean out the plugs and put the wells back on production but
    none had been successful for more than a few days before another plug formed. 
    Consequently there is no meaningful information regarding the sustained production
    capacity of the wells. No cores have been taken from the test wells in the
    Trona Area project.  It is Nation Energy's understanding that the operator
    determined that core testing was uneconomical because the cost of performing
    such testing was not justified in light of the other testing being performed. 
    Because the operator has not undertaken to perform core testing, these data
    are not available to Nation Energy.

  SALE OF INTERESTS TO VRD

  Because of the poor operating results under the Joint Operating Agreement,
    the Company began to explore other alternatives to this arrangement. 
    On February 28, 2001 the Company entered into a Purchase and Sale Agreement
    with VRD, Inc., an affiliate of Saurus Resources, under which the Company has
    agreed to sell to VRD all of its interest in its oil and gas leases in the
    Greater Trona Area, all right, title and interest in and to all of the personal
    property, fixtures and improvements appurtenant to the such leases, and all
    of its rights under the Joint Operating Agreement with Saurus Resources. 
    The rights to be sold include the right to participate in the drilling, completion,
    tie-in and production of wells within the contract area.   In consideration
    for the sale, the Company will receive from VRD $2,165,780 in cash.

  -5-In addition, VRD will (a) assign to Nation Energy an overriding royalty interest
    equal to an undivided 2% to 3% (Nation Energy will retain a 3% royalty in
    leases covering approximately 3200 acres of the property in Sweetwater County
    and a 2% royalty in the remaining property to which it has a leasehold interest)
    of certain oil, gas and other hydrocarbons produced, saved and sold, and (b) upon
    the acquisition of an interest in an oil and gas lease within a specified
    area prior to December 31, 2021, assign an overriding royalty of an undivided
    minimum of 1% and a maximum of 2% of 8/8ths of all oil, gas and other hydrocarbons
    produced, saved and sold from such interest.  In essence, as a result
    of the sale VRD will acquire Nation Energy's interest in the Greater Trona
    prospect in exchange for cash and an interest in possible future royalty payments
    that will be paid if the properties are put into production and the production
    from the oil and gas leases is sold.  Due to the highly speculative nature
    of the venture set forth in the Joint Operating Agreement, and its failure
    to create any revenues to date as explained below, the Board of Directors
    of Company has determined that resources committed under the Joint Operating
    Agreement could be better directed to other as yet undetermined activities.

  The Company has proposed to obtain the approval of its shareholders of the
    transactions contemplated in the Purchase and Sale Agreement.  This details
    of this transaction and the reasons for this transaction are described in
    detail in the Company's Consent Solicitation Statement on Schedule 14A, which
    was filed on April 26, 2001 and subsequently amended by a filing made June
    28, 2001.  This filing, as amended, is incorporated into this Form 10-KSB
    by reference.  The Company is hopeful that it will be able to send the
    Consent Solicitation Statement to its shareholders and obtain shareholder
    approval of the sale shortly after the date of  filing of this Form 10-KSB. 
    Following the consummation of the sale, the Company will be a shell company
    without operations but with significant cash assets.  It is expected
    that Nation Energy will continue to investigate business opportunities consistent
    with its historical oil and gas exploration activities as well as other business
    opportunities outside of its previous business activities.  At this time
    the Company has not yet identified any additional oil and gas opportunities
    which it is willing to pursue.

  Neither Nation Energy, its affiliates, its control persons, nor, to Nation
    Energy's knowledge, any beneficial owners of Nation Energy's capital stock,
    have any business relationship or other affiliation with Saurus Resources
    outside of the Joint Operating Agreement.  Neither Nation Energy, nor,
    to Nation Energy's knowledge, any beneficial owners of Nation Energy's capital
    stock, have any  business relationship or other affiliation with VRD,
    Inc. outside of the Purchase and Sale Agreement.

  SELECTION OF TARGET AREAS FOR ACQUISITION

  The Company has historically  considered several factors in choosing
    a region for acquisition of oil and gas leases. The Company has considered
    those regions in which its industry contacts, the officers of the Company,
    have the most experience in order to benefit from such experience.  Donald
    A. Sharpe, the Company's President, Chief Executive Officer, and a director,
    has over twenty years of experience in oil and gas exploration and development
    in the Western Canadian sedimentary basin, the U.S. Rocky Mountain basin,
    the U.S. gulf coast area, and several international basins.  John R.
    Hislop , the Company's Chairman of the Board of Directors, Vice President
    and Chief Financial Officer, Secretary and a director, has experience in oil
    and gas exploration and development in the U.S. Green River basin, the U.S.
    Powder River basin, and the Western Canadian sedimentary basin.  The
    Company has determined which leases it is interested in exploring based upon
    the analysis of technical and production data, financial analysis based on
    such production analysis, on site verification of well equipment and production
    capability, and verification of ownership of leasehold rights.

  -6-GEOLOGICAL AND GEOPHYSICAL TECHNIQUES

  The Company has employed and may employ in the future detailed geological
    interpretation to identify
    potential ventures. Geological interpretation is based upon data recovered
    from existing oil and gas wells in an area and other sources. Such information
    is either purchased from the company that drilled the wells or becomes public
    knowledge through state agencies after a period of years. Through analysis
    of rock types, fossils and the electrical and chemical characteristics of
    rocks from existing wells, the Company can construct a picture of rock layers
    in the area. Further, the Company will have access to the logs from the existing
    operating wells which will allow the Company to extrapolate a decline curve
    and make an estimation of the number of recoverable barrels of oil or cubic
    feet of gas existing beneath a particular lease. The Company has not purchased,
    leased, or entered into any agreements to purchase or lease any of the equipment
    necessary to conduct more advanced geological or geophysical testing
	techniques that its competitors may utilize.

  MARKET FOR OIL PRODUCTION

  The market for oil and gas production is regulated by federal, state and foreign
    governments. The overall market is mature and with the exception of gas, all
    producers in a producing region will receive the same price. The major oil
    companies will purchase all crude oil offered for sale at posted field prices.
    There are price adjustments for deviations from the quality standards established
    by the purchaser. Oil sales are normally contracted with a "gatherer"
    which is a third-party who contracts to pick-up the oil at the well site.
    In some instances there may be deductions for transportation from the wellhead
    to the sales point. The majority of crude oil purchasers do not at this time
    charge transportation fees, unless the well is outside their service area.
    The oil gatherer will usually handle disbursements of sales revenue to both
    the owners of the well (a "working interest owner") as well as payments
    to persons entitled to royalties as a result of such sales ("royalty
    owners"). The Company typically will be a working interest owner in the
    projects that it undertakes or in which it invests. By being a working interest
    owner, the Company is responsible for the payment of its proportionate share
    of the operating expenses of the well. Royalty owners receive a percentage
    of gross oil production for the particular lease and are not obligated in
    any manner whatsoever to pay for the cost of operating the lease. Therefore,
    the Company, in most instances, will be paying the expenses for the oil and
    gas revenues paid to the royalty owners.

  MARKET FOR GAS PRODUCTION

  In contrast to sales of oil, the gas purchaser will pay the well operator
    100% of the sales proceeds monthly for the previous month's sales. The operator
    is responsible for all checks and distributions to the working interest and
    royalty owners. There is no standard price for gas. Prices will fluctuate
    with the seasons and the general market conditions. It is the Company's intention
    to utilize this market whenever possible in order to maximize revenues. The
    Company does not anticipate any significant change in the manner its gas production
    would be purchased, however, no assurance can be given that such changes will
    not occur in the future.

  -7-RELIANCE ON MANAGEMENT

  If the proposed sale of the Company's interests in the Greater Trona Area
    prospect  to VRD is consummated, the Company will essentially be a shell company
    without operations but with significant cash assets.  Whether this transaction
    is consummated or not, investors will have to rely upon the judgment and ability
    of the Company's management with regard to locating additional oil and gas
    and other business opportunities, finding partners to spread the risk of the
    projects in which it engages, acquiring additional funding, and applying the
    Company's limited resources if and when the Company is able to identify other
    projects in which the company may choose to participate.  The Company
    has not entered into employment contracts with and does not carry key-person
    insurance for its officers and directors.  Since the nature and extent
    of the Company's participation in the Greater Trona Area project and other
    projects, as well as any other activities in which the Company may engage,
    is subject to many uncertainties, investors must have a high level of confidence
    in the judgment and ability of the management of the Company to make decisions
    on behalf of the Company pursuant to the circumstances surrounding such projects.
    Any investors that are not comfortable with these risks and the uncertainties
    of the Company's potential participation in the Greater Trona Area project,
    and other projects, or any investor relying upon the fact that the Company
    will participate in the Greater Trona Area project and not have to possibly
    search for other prospects should not invest.

  COMPETITION

  The oil and gas industry is highly competitive. Competition for prospects
    and producing properties is intense. If the Company pursues new opportunities
    in oil and gas exploration, it will be competing with a number of other potential
    purchasers of prospects and producing properties, most of which will have
    greater financial resources than the Company. The bidding for prospects has
    become particularly intense with different bidders evaluating potential acquisitions
    with different product pricing parameters and other criteria that result in
    widely divergent bid prices. The presence in the market of bidders willing
    to pay prices higher than are supported by the Company's evaluation criteria
    could further limit the ability of the Company to acquire prospects and low
    or uncertain prices for properties can cause potential sellers to withhold
    or withdraw properties from the market. In this environment, there can be
    no assurance that there will be a sufficient number of suitable prospects
    available for acquisition by the Company or that the Company will be able
    to obtain financing for or participants to join in the development of prospects.
    The Company's competitors and potential competitors include major oil companies
    and independent producers of varying sizes. Most of the Company's competitors
    have greater financial, personnel and other resources than the Company and
    therefore have greater leverage to use in acquiring prospects, hiring personnel
    and marketing oil and gas. A high degree of competition in these areas is
    expected to continue indefinitely.

  GOVERNMENTAL REGULATION

  The production and sale of oil and gas is subject to regulation by state,
    federal, local authorities, and foreign governments. In most areas there are
    statutory provisions regulating the production of oil and natural gas under
    which administrative agencies may set allowable rates of production and promulgate
    rules in connection with the operation and production of such wells, ascertain
    and determine the reasonable market demand of oil and gas, and adjust allowable
    rates with respect thereto.

  -8-The sale of liquid hydrocarbons was subject to federal regulation under the
    Energy Policy and Conservation Act of 1975 that amended various acts, including
    the Emergency Petroleum Allocation Act of 1973. These regulations and controls
    included mandatory restrictions upon the prices at which most domestic crude
    oil and various petroleum products could be sold. All price controls and restrictions
    on the sale of crude oil at the wellhead have been withdrawn. It is possible,
    however, that such controls may be reimposed in the future but when, if ever,
    such reimposition might occur and the effect thereof on the Company cannot
    be predicted.

  Approvals to conduct oil and gas exploration and production operations are
    required from various governmental agencies. There is no assurance when and
    if such approvals will be granted.

  EMPLOYEES

  Nation Energy currently has no employees other than its officers and directors. 
    Management of Nation Energy expects to hire additional employees as needed.
     Management currently estimates that Nation Energy will not hire any
    employees in the next twelve months.  Beginning in January 2001, Nation
    Energy has received administrative and back office support under an oral administrative
    services agreement with Caravel Management Corp., under which Nation Energy
    is charged $3,000 per month.  Caravel Management Corp. is a management
    company that is wholly-owned by John R. Hislop, Nation Energy's Chairman of
    the Board, Secretary and Vice President and Chief Financial Officer and a
    director.  The administrative agreement is on a month-to-month basis.

  ENVIRONMENTAL LAWS

  The Company intends to conduct its operations in compliance with all applicable
    environmental laws. The cost of such compliance has been and will be factored
    into the estimated costs of drilling and production. The effects of applicable
    environmental laws are to add to the cost of operations in the Trona region
    and elsewhere and to add to the time it takes to bring a project to fruition.
     The Company estimates that the cost of compliance with the various environmental
    regulations that apply to drill rig operations in the Greater Trona Area will
    average approximately $20,000 per well site.  Under its arrangement with
    Saurus, the Company will bear one-half of the operating costs of its drill
    rig operations in the Trona Area venture, thus the Company's estimated cost
    of environmental compliance will approximate $10,000 per well head. 
    These estimated costs include the costs of site restoration and abandonment
    as well as compliance with regulations affecting the ongoing operation of
    the rigs.  These costs will not be incurred should it proceed with the
    sale of its interests in the Greater Trona Area project to VRD.  In the
    event the Company enters into oil and gas projects in the future, it is anticipated
    that the Company will bear its proportionate share of similar or greater costs
    under such arrangements.

  -9-ITEM 2. DESCRIPTION OF PROPERTY

  PRINCIPAL PROPERTY

  The Company holds interests in 28 oil and gas leases located in the Greater
    Trona Area prospect, located in and around Sweetwater County, Wyoming. 
    These leases cover approximately 22,000 acres.   The interests proposed
    to be sold to VRD under the Purchase and Sale Agreement consist of both Nation
    Energy's rights under these leases, as well as Nation Energy's rights under
    the Joint Operating Agreement with Saurus Resources (described above). 
    These interests include Nation Energy's interest in leases from the State
    of Wyoming of oil and gas rights located in the Greater Trona Area. 
    The leases with the State of Wyoming have five year terms beginning December
    8, 1999 and thereafter and provide that one-sixth of the royalties earned
    for development on the leased lands are payable to the state of Wyoming. 
    The interests proposed to be sold also include Nation Energy's interest in
    leases from the United States Department of the Interior, Bureau of Land Management,
    of oil and gas rights located in the Greater Trona Area.  These leases
    with the United States have ten year terms beginning February 1, 2000 and
    thereafter and provide that one-eighth of the royalties earned from the development
    on the leased lands are payable to the United States.  The leased interests
    proposed to be sold to VRD are set forth in detail in Exhibit A to the Purchase
    and Sale Agreement attached to the Company's Consent Solicitation Statement
    on Schedule 14A which has been incorporated in this Form 10-KSB by reference.

  The Company anticipates that the Purchase and Sale Agreement will ultimately
    be approved and the sale to VRD completed as set forth in that agreement. 
    However, in the event the sale is not approved or otherwise does not close,
    Nation Energy will continue to be bound by the Joint Operating Agreement with
    Saurus. Under the agreement with Saurus, Saurus and the Company will each
    pay 50% of the costs of obtaining the necessary rights and drilling exploratory
    wells in the Greater Trona prospect.  If the proposed sale does not occur,
    Nation Energy will continue to have the interests  that would be sold
    under the Purchase and Sale Agreement, which include the right to participate
    in the acquisition of leases within the contract area and to participate in
    capital programs as may be presented,  for an indefinite period of time.  Nation
    Energy will also continue to pay its proportionate share of annual lease payments
    of between $1.00 and $1.50 per acre per year under its oil and gas leases
    until such leases are sold.  The agreement terminates only upon the event
    that either Saurus or the Company loses its respective rights to develop within
    the Greater Trona Area.

  The only other real property utilized by the Company is office space located
    at Suite 1100 - 609 West Hastings Street, Vancouver BC  Canada 
    V6B 4W4.  In January 2001, the Company entered into an oral administrative
    services agreement with Caravel Management Corp., under which the Company
    receives office and administrative support services and use of office space
    for a monthly charge of $3,000.  Of this amount, $500 is for the use
    of office space.  Caravel Management Corp. is a management company that is
    wholly-owned by John R. Hislop, Nation Energy's chairman of the Board, Secretary
    and Vice President and Chief Financial Officer.  The administrative agreement
    is on a month-to-month basis.  Prior to January 2001 Nation Energy was
    not charged rent due the minimal amount of space required to direct operations
    and store records.  Nation Energy does not plan to make any investments
    in real estate mortgages, in securities of persons primarily engaged in real
    estate activities.  Nation Energy may acquire interests in real estate
    in the future in connection with its oil and gas exploration and development
    activities or in connection with other business activities that are unforeseen
    at this time.

  The Company has no real estate interests carried on its books as assets. The
    Company has no proved oil or gas reserves. The Company as yet has no oil production,
    productive wells or acreage and no delivery commitments.

  -10-ITEM 3. LEGAL PROCEEDINGS

  None.

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

  None.

  PART II

  ITEM 5. MARKET FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

  (a)           Market information.

  The Company's Common Stock is traded over-the-counter on NASD'S Over the Counter
    Bulletin Board ("OTCBB") under the symbol "NEGY". Prior
    to March 13, 2000, the Company's Common Stock traded on the OTCBB under the
    symbol "XCNT." The change in the symbol resulted from the Company's
    change of its name from Excalibur Contracting, Inc. to its current name on
    February 15, 2000.

  The price range of high and low bid for the Company's Common Stock as published
	by a third party service for the
    periods shown is set forth below. The Company's common stock was not traded
    on the OTC Bulletin Board until the first quarter of 1999. The quotations
    reflect inter-dealer prices, without retail mark-ups, mark-downs or commissions,
    and may not represent actual transactions.  According to information
    published by the OTC Bulletin Board, from January 1, 2001 to May 31, 2001,
    the total volume of trades  of the Company's Common Stock was 504,000
    shares.  The average daily volume is extremely volatile, with no trades
    occurring on most trading days.

  Period (1)(2)
      High
      LowSecond quarter 1999
      1 1/2
      1/8Third quarter 1999
      1 1/2
      1Fourth quarter 1999
      1 1/2
      7/8First quarter 2000
      5
      7/8Second quarter 2000
      5
      1/2Third quarter 2000
      2 5/8
      9/16Fourth quarter 2000
      2 3/8
      1/2First quarter 2001(3)
      1 9/32
      29/32(1) Calendar quarters. 
    (2) Source: IDD Information Services, Tradeline.  
    (3) No pricing activity for the last day of the period.

  -11-(b)           Stockholders.

  As of April 26, 2001 there were approximately 35 shareholders of record of
    Company common stock. No shares of Preferred Stock have been issued.

  (c)           Dividends.

  The Company has never declared a cash dividend.

  On January 22, 2001, the Company closed a private offering of 3,850,000 shares
    of its Common Stock at an offering price of $1.00 per share.  Net proceeds
    from this offering  were approximately $3,850,000.  The following
    persons acquired shares in the private placement described: Sextan Capital,
    3,000,000 shares; Jeffrey L. Taylor, 65,000 shares; and Crown Taylor, 400,000
    shares.  An additional 385,000 shares were purchased in the private placement
    by accredited investors who, to the knowledge of the Company, are not related
    to the Company or its affiliates persons and who are otherwise not subject
    to disclosure obligations under applicable law.  This transaction resulted
    in a change of control which was reported on Form 8-K which was filed with
    the Securities and Exchange Commission on February 6, 2001.  3,465,000
    of the shares sold in this private placement were sold to affiliates of the
    Company.  See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT--Security
    Ownership of Certain Beneficial Owners" and "CERTAIN RELATIONSHIPS AND RELATED
    PARTY TRANSACTIONS."  This offering was not underwritten.

  

  The offering was extended to only a small number of persons known to the Company
    who represented that they were accredited investors as defined under Regulation
    D, sophisticated, and purchasing the shares for investment and not with a
    view to a distribution.  Purchasers under the offering received disclosure
    and were required to acknowledge that the shares were not registered and could
    not be resold except in compliance with the Securities Act.  The transfer
    agent for the shares was instructed to (a) place legends stating that the
    shares are not registered under the Securities Act and the restrictions on
    resale applicable to such shares, and (2) put stop transfer orders in effect
    with respect to the securities sold.  The Company engaged in no general
    solicitation or general advertising, as described in Rule 504, in connection
    with the offering.  The Company believes that this offering is exempt
    from registration under Section 4(2) of the Securities Act, and subject to
    filing of notices of sale on Form D with respect to the offering in compliance
    with Rule 503, the offering is in compliance with Rule 506.

  -12-ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

  RESULTS OF OPERATIONS

  Nation Energy entered into a definitive
    Joint Operating Agreement on December 1, 1999 with Saurus Resources, Inc.,
    under which Nation Energy and Saurus Resources agreed to jointly develop their
    respective interests in land within the Greater Trona Area located in and
    around Sweetwater County, Wyoming, and Nation Energy could participate in
    up to 50% of the profits therefrom. 
	Assuming the completion of Nation Energy's sale of its rights under this agreement and
	certain assets to VRD,
    Inc., Nation Energy will essentially be a shell company and will not conduct
    any significant operations.	See "MANAGEMENT'S DISCUSSION
    AND ANALYSIS-PLAN OF OPERATION" and "DESCRIPTION OF THE BUSINESS--ACTIVITIES
    UNDER THE AGREEMENT WITH SAURUS RESOURCES."

  REVENUES

  Nation Energy has had no revenues from the date of its formation in April
    18, 1988 to the present.

  PLAN OF OPERATION

  Nation Energy has conducted no significant operations.  Although Nation
    Energy has reviewed its potential participation in several oil and gas projects
    in the Rocky Mountain region, it has entered into only one agreement as of
    this date.  This agreement is the Joint Operating Agreement with Saurus
    Resources Inc., described above in "DESCRIPTION OF THE BUSINESS--ACTIVITIES
    UNDER THE AGREEMENT WITH SAURUS RESOURCES."  Nation Energy is seeking
    shareholder approval of a sale of its interests under this agreement and its
    interests in land to VRD, Inc. as described above in " DESCRIPTION OF
    THE BUSINESS--SALE TO VRD."  Following the consummation of this sale,
    the Company will essentially be a shell company without operations but with significant
    cash assets.  It is expected that Nation Energy will continue to actively
    investigate business opportunities consistent with its historical business
    activities of oil and gas exploration as well as other business opportunities
    outside of its historical business activities.  At this time the Company
    has not yet identified any additional oil and gas opportunities which it is
    willing to pursue.

  Prior to the consummation of the sale to VRD, and in the event the sale to
    VRD is not consummated, the Company will continue to hold its interests in
    28 lease hold interests in the Greater Trona Area and hold its rights under
    the Joint Operating Agreement with Saurus Resources.  If the sale to
    VRD is not consummated, Nation Energy will continue to hold its right to participate
    in the acquisition of leases within the contract area and to participate in
    oil and gas exploration and development in such area for an indefinite period
    of time.  Nation Energy will also continue to pay its proportionate
    share of annual lease payments of between $1.00 and $1.50 per acre per year
    (or an aggregate amount of approximately $30,000) under the oil and gas leases
    in which it holds an interest.   Due to the poor results to date
    of the drilling operations under the Joint Operating Agreement, it is uncertain
    whether the Company will elect to participate in future exploration opportunities
    under the Joint Operating Agreement.

  The Company does not foresee hiring any additional employees in the next twelve
    months. The Company currently expects to make no capital acquisitions over
    the next twelve months. Whether or not the sale to VRD is consummated, the
    Company has enough cash to meet its obligations the next twelve months.

  -13-GEOLOGICAL AND GEOPHYSICAL TECHNIQUES

  The Company may, within the next twelve months or thereafter, employ detailed
    geological interpretation combined with advanced seismic exploration techniques
    to identify potential ventures. Geological interpretation is based upon data
    recovered from existing oil and gas wells in an area and other sources. Such
    information is either purchased from the company that drilled the wells or
    becomes public knowledge through state agencies after a period of years. Through
    analysis of rock types, fossils and the electrical and chemical characteristics
    of rocks from existing wells, the Company can construct a picture of rock
    layers in the area. Further, the Company will have access to the logs from
    the existing operating wells which will allow the Company to extrapolate a
    decline curve and make an estimation of the number of recoverable barrels
    of oil or cubic feet of gas existing beneath a particular lease. The Company
    has not purchased, leased, or entered into any agreements to purchase or lease
    any of the equipment necessary to conduct the geological or geophysical testing
    referred to herein and will only to do so should the Board of Directors find
    that the information otherwise available to the Company is insufficient to
    identify potentially profitable oil and gas properties.

  LIQUIDITY AND CAPITAL RESOURCES

  The Company's material commitments for capital expenditures are limited to
    (a) the Company's obligation under the Joint Operating Agreement with Saurus
    Resources to pay the one-half of annual lease rentals, which range between
    $1.00 and $1.50 per acre per year (the Joint Operating Agreement currently
    covers approximately 22,000 acres), and (b) the Company's share of eventual
    abandonment and lease restoration costs for the wells in which it has participated,
    which is estimated to average $10,000 per well for a total of 24 wells drilled
    to date.  Whether or not the sale to VRD is consummated, the Company
    has enough cash to meet its obligations the next twelve months.

  The Company has no operating history.  The Company can only estimate
    the future needs for capital based on the current status of the Company's
    operations, its current plans and current economic condition. Due to the uncertainties
    regarding its future activities, the Company is unable to predict precisely 
    what amount will be used for any particular purpose.

  -14-RISK FACTORS

  THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL EVENTS OR RESULTS
    COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS
    AS A RESULT OF VARIOUS FACTORS INCLUDING, WITHOUT LIMITATION, THE RISK FACTORS
    SET FORTH BELOW AND ELSEWHERE IN THIS REPORT. AN INVESTMENT IN THE SECURITIES
    OF THE COMPANY INVOLVES A HIGH DEGREE OF RISK. THE FOLLOWING DOES NOT PURPORT
    TO BE A COMPREHENSIVE SUMMARY OF ALL THE RISKS ASSOCIATED WITH AN INVESTMENT
    IN THE COMPANY. RATHER, THE FOLLOWING ARE ONLY CERTAIN PARTICULAR RISKS TO
    WHICH THE COMPANY IS SUBJECT THAT THE COMPANY WISHES TO ENCOURAGE PROSPECTIVE
    INVESTORS TO DISCUSS IN DETAIL WITH THEIR PROFESSIONAL ADVISORS. PROSPECTIVE
    INVESTORS, PRIOR TO MAKING AN INVESTMENT IN THE COMPANY, SHOULD CAREFULLY
    CONSIDER, AMONG OTHERS, THE FOLLOWING RISK FACTORS:

  No Operating History and Revenues. Assuming the completion of the Company's
    sale of certain assets to VRD, Inc. the Company will be a shell company and is
    subject to all the risks inherent in the creation of a new business. The Company
    has no established business plan or operating results which may be used to
    evaluate the Company's prospects.  The Company has no employees other
    than its management team. Management of the Company has substantial discretion
    with respect to the use of assets of the Company.  Since the Company
    is a new venture, it has no record of operations, and there is nothing at
    this time upon which to base an assumption that the Company's future activities
    will prove successful. If the Company's activities prove to be unsuccessful, investors
    in the Company may lose all or a substantial part of their investment.

  Regulation of Penny Stocks.  The Company's securities are subject
    to Securities and Exchange Commission rules that impose special sales practice
    requirements upon broker-dealers who sell such securities to persons other
    than established customers or accredited investors.  For purposes of
    the rule, the phrase "accredited investors" means, in general terms, institutions
    with assets in excess of $5,000,000, or individuals having a net worth in
    excess of $1,000,000 or having an annual income that exceeds $200,000 (or
    that, when combined with a spouse's income, exceeds $300,000).  For transactions
    covered by the rule, the broker-dealer must make a special suitability determination
    for the purchaser and receive the purchaser's written agreement to the transaction
    prior to the sale.  Consequently, the rule may affect the ability of
    broker-dealers to sell the Company's securities and also may affect the ability
    of purchasers to sell their securities in any market that might develop therefore.

  In addition, the Securities and Exchange Commission has adopted a number of
    rules to regulate "penny stocks".  Such rules include Rules 3a51-1, 15g-1,
    15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange
    Act of 1934, as amended.  Because the securities of the Company may constitute
    "penny stocks" within the meaning of the rules, the rules would apply to the
    Company and to its securities.  The rules may further affect the ability
    of owners of shares to sell the securities of the company in any market that
    might develop for them.

  -15-Shareholders should be aware that, according to the Securities and Exchange
    Commission, the market for penny stocks has suffered in recent years form
    patterns of fraud and abuse.  Such patterns include (1) control of the
    market for the security by one or a few broker-dealers that are often related
    to the promoter or issuer; (ii) manipulation of prices through prearranged
    matching of purchases and sales and false and misleading press releases; (iii)
    "boiler room" practices involving high-pressure sales tactics and unrealistic
    price projections by inexperienced sales person; (iv) excessive and undisclosed
    bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale
    dumping of the same securities by promoters and broker-dealers after prices
    have been manipulated to a desired level, along with the resulting inevitable
    collapse of those prices and with consequent investor losses.  The Company's
    management is aware of the abuses that have occurred historically in the penny
    stock market.  The Company does not expect to be in a position to dictate
    the behavior of the market or of broker-dealers who participate in the market.

  No Contracted Projects. Assuming the completion of the Company's sale
    of certain assets to VRD, Inc. the Company will be essentially a shell corporation.
	There is no assurance that the Company will be able
    to successfully identify and enter into agreements with regards to any attractive
    business prospects or, if such prospects are identified and agreements are
    entered into, that such prospects will be financially successful. See "DESCRIPTION
    OF BUSINESS."

  Lack of Liquidity and Publicly Available Information. The Common Stock
    is currently trading on the OTC Bulletin Board under the symbol "NEGY".
    The Common Stock is thinly traded on the OTC Bulletin Board and there can
    be no assurance that the shares of the Common Stock will be readily saleable
    thereon.  According to information published by the OTC Bulletin Board,
    from January 1, 2001 to May 31, 2001, the total volume of trades of the Company's
    Common Stock was 504,000 shares.  The average daily volume is extremely
    volatile, with no trades occurring on most trading days.

  Conflicts of Interest.  Certain conflicts of interest may exist
    between the Company and its officers and directors.  They have other
    business interests to which they devote their attention, and may be expected
    to continue to do so although management time should be devoted to the business
    of the Company.  As a result, conflicts of interest may arise that can
    be resolved only through exercise of such judgment as is consistent with fiduciary
    duties to the Company.

  Wildcat Drilling. The Company may engage in additional exploration
    of hydrocarbons by drilling unproven prospects. Such a practice is known as
    wildcat drilling, a very high risk drilling activity. Investors should be
    aware that there is a high probability that the Company could drill a "dry
    hole" and that the investor could lose all or a substantial part of their
    entire investment.

  Volatility of Oil and Gas Markets.  The price of oil and gas historically
    has been subject to substantial volatility which has only increased in recent
    years.  For example, from June 1999 to June 2001, the historical monthly
    average NYMEX price for light sweet crude oil has varied from $18 per barrel
    to over $34 per barrel, and the historical monthly average NYMEX price for
    natural gas has varied from less than $2.50 to over $8.50 per million Btu. 
    There can be no assurance that this volatility will not continue in the future,
    making it difficult for the Company's strategic planning and the valuation
    of prospects.

  -16-Availability of Suitable Prospects or Producing Properties. Competition
    for prospects and producing properties is intense.  Should the Company
    pursue additional oil and gas opportunities, it will be competing with a number
    of other potential purchasers of prospects and producing properties, most
    of whom will have greater financial resources than the Company. The bidding
    for prospects has become particularly intense with different bidders evaluating
    potential acquisitions with different product pricing parameters and other
    criteria that result in widely divergent bid prices. The presence in the market
    of bidders willing to pay prices higher than are supported by the Company's
    evaluation criteria could further limit the ability of the Company to acquire
    prospects and low or uncertain prices for properties can cause potential sellers
    to withhold or withdraw properties from the market. In this environment, there
    can be no assurance that there will be a sufficient number of suitable prospects
    available for acquisition by the Company or that the Company can obtain financing
    for or participants to join in the development of prospects. See "DESCRIPTION
    OF BUSINESS."

  Title to Properties. It is customary in the oil and gas industry to
    acquire an interest in a property based upon a preliminary title investigation. 
    The Company has not undertaken to have title searches performed on the properties
    in which it holds an interest and it does not anticipate that it will do so
    in the future.  If the title to the prospects should prove to be defective,
    the Company could lose the costs of acquisition, or incur substantial costs
    for curative title work.

  Shut-in Wells and Curtailed Production. Production from gas wells may
    be curtailed or shut-in for considerable periods of time due to a lack of
    market demand, and such curtailments may continue for a considerable period
    of time in the future. There may be an excess supply of gas in areas where
    the Company's operations will be conducted. In such an event, it is possible
    that there will be no market or a very limited market for the Company's prospects.

  Operating and Environmental Hazards. Hazards incident to the operation
    of oil and gas properties, such as accidental leakage of petroleum liquids
    and other unforeseen conditions, may be encountered by the Company if it participates
    in developing a well and, on occasion, substantial liabilities to third parties
    or governmental entities may be incurred. The Company could be subject to
    liability for pollution and other damages. Governmental regulations relating
    to environmental matters could also increase the cost of doing business or
    require alteration or cessation of operations in certain areas.  The
    Company estimates that the costs of environmental compliance and site restoration
    will average $20,000 per well site; under its arrangement with Saurus Resources
    the Company bears one-half of the cost for the well sites in which it elects
    to participate.  These substantial costs will affect the profitability
    of the wells in which the Company has an undivided interest and if actual
    cost of compliance is greater than anticipated or unforeseen liabilities are
    encountered, it may cause the Company to lose money on well sites that would
    otherwise be profitable.

  Uninsured Risks. The Company may not be insured against losses or liabilities
    which may arise from operations, either because such insurance is unavailable
    or because the Company has elected not to purchase such insurance due to high
    premium costs or other reasons.  The Company currently lacks adequate
    insurance to cover all of the material risks that it may face.

  Federal and State Taxation. Federal and state income tax laws are of
    particular significance to the oil and gas industry. Recent legislation has
    eroded previous benefits to oil and gas producers, and any subsequent legislation
    may continue this trend. The states in which the Company may conduct oil and
    gas activities also impose taxes upon the production of oil and gas located
    within such states. There can be no assurance that the tax laws will not be
    changed or interpreted in the future in a manner which adversely affects the
    Company.

  -17-Government Regulation. The oil and gas business is subject to substantial
    governmental regulation, including the power to limit the rates at which oil
    and gas are produced and to fix the prices at which oil and gas are sold.
    It cannot be accurately predicted whether additional legislation or regulation
    will be enacted or become effective.

  Write-downs and Limits on Accuracy of Reserve Estimates. Oil and gas
    reserve estimates are necessarily inexact and involve matters of subjective
    engineering judgment. In addition, any estimates of future net revenues and
    the present value of such revenues are based on price and cost assumptions
    provided by the Company as its best estimate. These estimates may not prove
    to have been correct over time. A further decline in oil and gas prices may
    require the Company to write-down the value of its oil and gas reserves.

  Need for Additional Key Personnel. At present, the Company employs
    no full time employees. The success of the Company's proposed business may
    in the future depend, in part, upon the Company's ability to attract and retain
    qualified employees. If the Company is unable to engage and retain the necessary
    personnel, its business would be materially and adversely affected.

  Reliance Upon Directors and Officers. The Company is wholly dependent,
    at the present, upon the personal efforts and abilities of its officers who
    will exercise control over the day to day affairs of the Company, and upon
    its Directors, most of whom are engaged in other activities, and will devote
    limited time to the Company's activities.  The Company's officers devote
    limited time to the Company's activities.  It is estimated that John
    R. Hislop devotes approximately 5% of his working hours and that Donald Sharpe
    devotes approximately 10% of his working hours to the affairs of the Company. 
    For a description of the other business activities of Messrs. Hislop and Sharpe,
    please see "DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
    COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT."

  FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN THE PURCHASE
    OF THE SHARES OF THE COMPANY INVOLVES A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
    AN INVESTMENT IN THE SHARES OF THE COMPANY SHOULD BE AWARE OF THESE AND OTHER
    FACTORS SET FORTH IN THIS REPORT. THE SHARES OF COMMON STOCK SHOULD BE PURCHASED
    ONLY BY PERSONS WHO CAN AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT
    IN THE COMPANY AND HAVE NO NEED FOR A RETURN ON THEIR INVESTMENT.

  -18-ITEM 7. FINANCIAL STATEMENTS

  

  
  Nation Energy, Inc.
  As of March 31, 2001 and for the 
    Years Ended March 31, 2001 and 2000
  
  Table of Contents
  

  PageReport of Independent Auditors
        20Balance Sheet
        21Statements of Operations
        22Statements of Changes in Stockholders' Equity
        23Statements of Cash Flows
        24Notes to Financial Statements
        25-30

  

  -19-REPORT OF INDEPENDENT AUDITORS
  

  

  Shareholders and Board of Directors 
    Nation Energy, Inc.

  We have audited the accompanying balance sheet of Nation Energy, Inc. as of
    March 31, 2001, and the related statements of operations, changes in stockholders'
    equity, and cash flows for the years ended March 31, 2001 and 2000. These
    financial statements are the responsibility of the Company's management. Our
    responsibility is to express an opinion on these financial statements based
    on our audit.

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

  In our opinion, the financial statements referred to above present fairly,
    in all material respects, the financial position of Nation Energy, Inc. as
    of March 31, 2001, and the results of its operations, and its cash flows for
    the years ended March 31, 2001 and 2000, in conformity with accounting principles
    generally accepted in the United States of America.

  As disclosed in Note 8 to the financial statements, the Company has restated
    the financial statements as of March 31, 2001 to correct for an error in recording
    contributed services and an asset impairment.

  Stark Tinter & Associates, LLC

  Denver, Colorado 
    June 20, 2001

  -20-Nation Energy, Inc.Balance SheetMarch 31, 2001(Restated)ASSETSCurrent assets:Cash
        $   2,292,340Unproved oil and gas properties - full cost method
        1,370,678$   3,663,018LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable
        $        12,330Accounts payable - related party
        15,22727,557Stockholders' equity:Preferred stock, $.001 par value; 5,000,000shares authorized; none
            outstanding
        -Common stock, $.001 par value; 50,000,000shares authorized; 11,020,000
            shares issuedand outstanding
        11,020Additional paid-in capital
        4,623,380Accumulated deficit
        (998,939)3,635,461$   3,663,018

  

  The accompanying notes are an integral part of the financial statements

  -21-Nation Energy, Inc.Statements of Operations(Restated)For the
        
        For theYear Ended
        
        Year EndedMarch 31, 2001
        
        March 31, 2000Revenue:
        $             
            -
        
        $            
            -Costs and expenses:General, selling and administrative
        107,520
        
        63,808Write down of unproven oil and gas properties
        738,675
        
        67,000Total costs and expenses
        846,195
        
        130,808Net (loss)
        $    (846,195)
        
        $    (130,808)Per share information:Weighted average number of commonshares outstanding - basic and
            diluted
        8,127,240
        
        7,161,803Net (loss) per common share - basic and diluted
        $          (0.10)
        
        $         (0.02)

  

  

  

  


  The accompanying notes are an integral part of the financial statements

  -22-Nation Energy, Inc.Statements of Changes in Stockholders' Equity(Restated)Common StockAdditional
        
        Common
        
        
        
        TotalNumber of
        
        
        
        Paid-in
        
        Stock
        
        Accumulated
        
        Stockholders'Shares
        
        Amount
        
        Capital
        
        Subscriptions
        
        Deficit
        
        EquityBalance, March 31, 1999
        
        
        7,070,000
        
        $   7,070
        
        $   722,330
        
        $           
          -
        
        $    (21,936)
        
        $    707,464Issuance of common stockfor services at $.20 per share
        
        
        100,000
        
        100
        
        19,900
        
        -
        
        -
        
        20,000Contribution of services byrelated party
        
        
        -
        
        -
        
        20,000
        
        -
        
        -
        
        20,000Common stock subscribedfor at $1.00 per share
        
        
        -
        
        -
        
        -
        
        3,500,000
        
        -
        
        3,500,000Net (loss) for the year
        
        
        -
        
        -
        
        -
        
        -
        
        (130,808)
        
        (130,808)Balance March 31, 2000
        
        
        7,170,000
        
        7,170
        
        762,230
        
        3,500,000
        
        (152,744)
        
        4,116,656Common stock subscribedfor at $1.00 per share
        
        
        -
        
        -
        
        -
        
        350,000
        
        -
        
        350,000Contribution of services byrelated party
        
        
        -
        
        -
        
        15,000
        
        -
        
        -
        
        15,000Conversion of common stocksubscriptions into common stock
        3,850,000
        
        3,850
        
        3,846,150
        
        (3,850,000)
        
        -
        
        -Net (loss) for the year, restated
        
        
        -
        
        -
        
        -
        
        -
        
        (846,195)
        
        (846,195)Balance March 31, 2001
        
        
        11,020,000
        
        $ 11,020
        
        $4,623,380
        
        $           
          -
        
        $   (998,939)
        
        $ 3,635,461

  

  

  


  The accompanying notes are an integral part of the financial statements

  -23-Nation Energy, Inc.Statements of Cash Flows(Restated)For the
        
        For theYear Ended
        
        Year EndedMarch 31, 2001
        
        March 31, 2000Cash flows from operating activities:Net (loss)
        $       (846,195)
        
        $      (130,808)Adjustments to reconcile net (loss) to net cashprovided by (used in) operating activities:Contribution of services recorded as additional
            aid-in capital
        15,000
        
        20,000Write down of unproven oil and gas properties
        738,675
        
        67,000Common stock issued for services
        -
        
        20,000Decrease (increase) in prepaid expenses
        100,632
        
        (100,632)Increase (decrease) in accounts payable
        18,354
        
        (11,538)Net cash provided by (used in) operating activities
        26,466
        
        (135,978)Cash flows from investing activities:Purchase of oil and gas properties
        (1,978,475)
        
        (197,878)Net cash (used in) investing activities
        (1,978,475)
        
        (197,878)Cash flows from financing activities:Proceeds from common stock subscriptions
        350,000
        
        3,500,000Net cash provided by financing activities
        350,000
        
        3,500,000Net increase (decrease) in cash
        (1,602,009)
        
        3,166,144Beginning cash
        3,894,349
        
        728,205Ending cash
        $     2,292,340
        
        $    3,894,349Supplemental cash flow information:Cash paid for interest
        $               
            -
        
        $              
            -Cash paid for income taxes
        $               
            -
        
        $              
            -

  The accompanying notes are an integral part of the financial statements

  -24-Nation Energy, Inc.
    Notes to Financial Statements
  

  Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Organization
  The Company was incorporated on April 19, 1988, in the State of Florida as
    Excalibur Contracting, Inc.  The Company was reincorporated as a Delaware
    corporation and changed its name to Nation Energy, Inc. in February 2000. 
    The Company is an oil and gas drilling company in the exploration stage and
    currently has no operations.

  Fair Value of Financial Instruments
  Fair value estimates discussed herein are based upon certain market assumptions
    and pertinent information available to management as of March 31, 2001. 
    The respective carrying value of certain on-balance-sheet financial instruments
    approximated their fair values.  These financial instruments include
    cash and accounts payable.  Fair values were assumed to approximate carrying
    values for these financial instruments because they are short term in nature
    and their carrying amounts approximate fair values or they are  payable
    on demand.

  Cash and Cash Equivalents
  The Company considers all highly liquid debt instruments purchased with a
    maturity of three months or less to be cash equivalents.

  Net (Loss) per Common Share
  The Company calculates net income (loss) per share as required by SFAS No.
    128, "Earnings per Share."  Basic earnings (loss) per share
    is calculated by dividing net income (loss) by the weighted average number
    of common shares outstanding for the period.  Diluted earnings (loss)
    per share is calculated by dividing net income (loss) by the weighted average
    number of common shares and dilutive common stock equivalents outstanding. 
    During periods when they are anti-dilutive, common stock equivalents are not
    considered in this computation.

  Comprehensive Income
  The Company follows Statement of Financial Accounting Standards No. 130, "Reporting
    Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes
    standards for reporting and display of comprehensive income and its components
    in the financial statements.

  -25-Nation Energy, Inc.
  Notes to Financial Statements

Unproved Oil and Gas Properties
The Company follows the full cost method of accounting for oil and gas operations
  whereby all costs associated with the exploration for and development of oil
  and gas reserves, whether productive or unproductive, are capitalized. 
  Such expenditures include land acquisition costs, drilling, completion and costs
  of well equipment.  Expenditures, which are considered unlikely to be recovered,
  are written off.  Internal costs are capitalized only if they can be directly
  identified with acquisition, exploration, or development activities.  As
  of March 31, 2001, the Company has not capitalized any internal costs. 
  The current oil and gas exploration and development activities are considered
  to be in the pre-production stage.

Expenditures that are considered unlikely to be recovered are written off. 
  On a quarterly basis the Board of Directors assesses whether or not there is
  an asset impairment.  The current oil and gas exploration and development
  activities are considered to be in the pre-production stage.

Segment Reporting
The Company follows Statement of Financial Accounting Standards No. 131, "Disclosures
  About Segments of an Enterprise and Related Information."  The Company
  operates as a single segment and will evaluate additional segment disclosure
  requirements as it expands its operations.

Estimates
The preparation of the Company's financial statements in conformity with generally
  accepted accounting principles requires the Company's management to make estimates
  and assumptions that affect the amounts reported in these financial statements
  and accompanying notes.  Actual results could differ from those estimates.

Stock-Based Compensation
The Company accounts for stock based compensation in accordance with SFAS No.
  123, "Accounting for Stock-Based Compensation." The provisions of
  SFAS No. 123 allow companies to either expense the estimated fair value of stock
  options or to continue to follow the intrinsic value method set forth in APB
  Opinion 25, "Accounting for Stock Issued to Employees" ("APB
  25") but disclose the pro forma effects on net income (loss) had the fair
  value of the options been expensed. The Company has elected to continue to apply
  APB 25 in accounting for its stock option incentive plans.


During 2000 the Company adopted a stock option plan.  The
  Company has reserved a total of 2,500,000 shares of common stock related to
  their stock option plan.  As of March 31, 2001, the Company had not granted
  any stock options.
  -26-Nation Energy, Inc.
  Notes to Financial Statements
The Company has issued its common stock as compensation to non-employees. 
  The Company measures the amount of stock-based compensation as of the earlier
  of (1) the date at which an agreement is reached with the non-employee as to
  the number of shares to be issued for performance, or (2) the date at which
  the non-employees performance is complete.

Recent Pronouncements
The FASB recently issued Statement No 137, "Accounting for Derivative Instruments
  and Hedging Activities-Deferral of Effective Date of FASB Statement No. 133".
  The Statement defers for one year the effective date of FASB Statement No. 133,
  "Accounting for Derivative Instruments and Hedging Activities". 
  The rule now will apply to all fiscal quarters of all fiscal years beginning
  after June 15, 2000.  In June 1998, the FASB issued SFAS No. 133, 
  "Accounting for Derivative Instruments and Hedging Activities". 
  The Statement will require the Company to recognize all derivatives on the balance
  sheet at fair value.  Derivatives that are not hedges must be adjusted
  to fair value through income.  If the derivative is a hedge, depending
  on the nature of the hedge, changes in the fair value of derivatives will either
  be offset against the change in fair value of the hedged assets, liabilities,
  or firm commitments through earnings or recognized in other comprehensive income
  until the hedged item is recognized in earnings.  The ineffective portion
  of a derivative's change in fair value will be immediately recognized in earnings. 
  The Company has not engaged in any hedging activities since its inception on
  April 19, 1988.

During December 1999, the Securities and Exchange Commission released Staff
  Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAS
  No. 101), which provides guidance on the recognition, presentation and disclosure
  of revenue in financial statements.  SAB No. 101 did not impact the Company's
  revenue recognition policies.

Note 2.  UNPROVED OIL AND GAS PROPERTIES
The Company currently is involved in one project as of March 31, 2001, the Greater
  Trona Prospect located in southeastern Wyoming.  Following is a summary
  of the costs incurred on unproved oil and gas properties as of March 31, 2001:



Acquisition of unproved properties
    $    401,290Exploration costs
    830,621Development costs
    944,442$ 2,176,353The initial principal activity for the Company will be the securing
  of oil and gas exploration contracts and joint ventures in the Greater Trona
  Area, Wyoming. On August 11, 1999, the Company signed a letter of intent with
  Saurus Resources Inc., giving the Company the option to enter into a joint venture
  with Saurus under which theCompany may acquire up to 50% of the profits resulting
  from oil and gas development by the venture in the Greater Trona Area prospect,
  located in southwest Wyoming.
-27-

Nation Energy, Inc.
  Notes to Financial Statements
Saurus currently has an interestin 11,960 acres and is negotiating
  to acquire an interest in an additional 10,155 acres in the Greater Trona Area
  prospect. Under the terms of the letter, the Company paid for a study reporting
  on the economic and geologic merits of the Trona venture and had until September
  15, 1999 to enter into a joint venture with Saurus.  The Company elected
  to proceed with the joint venture.
If additional lands become available for purchase and the Company is successful
  in leasing such additional lands, Saurus shall have the option to defer its
  50% share of the cost of the first 100,000 acres of such additional land that
  the Company may purchase.

As of December 31, 2000 the Company had participated in the drilling of 23 wells
  in the Greater Trona area. During February 2001, the Company hired an independent
  engineer to evaluate the Greater Trona project.  Based on the recommendations
  in this report, the Company negotiated a sale of its interests in the Greater
  Trona area to VRD Inc. This agreement was signed on February 28 2001. The agreement
  will require the approval of a majority of the Company's shareholders. 
  The proxy statement for approval of the sale of the Company's interest in the
  Greater Trona project is pending the approval of the Securities and Exchange
  Commission.  Since December 31, 2000 the Company has not participated in
  any further operations in the Greater Trona area. (See Note 9)

The Board of Directors has concluded that as of March 31, 2001 there was an
  asset impairment related to the unproved oil and gas properties related to drilling
  activities within the Greater Trona Area.  For the year ending March 31,
  2001 the Company has written down drilling costs of $738,675.  The Company
  has written off a total of $805,675 since the project's inception.

As of the date of the audit report the Company is unable to estimate the timing
  of the inclusion of the costs in the full cost amortization calculation.

Note 3.  CONCENTRATIONS OF CREDIT RISK
The Company's funds are federally insured up to $100,000.  As of March
  31, 2001, the funds under deposit exceed this insured amount by $2,196,268.

Note 4.  STOCKHOLDERS' EQUITY
On September 16, 1998, the Company forward split its common stock 1,000 for
  1, thus increasing the number of outstanding common stock shares from 1,000
  shares to 1,000,000 shares. All shares and per shares amounts have been adjusted
  to give effect to this split.

At inception the Company issued 1,000,000 shares of its $0.001 par value common
  stock for services valued at $1,000.  These shares were valued at their
  fair market value on the date the Company agreed to issue the shares.

On February 10, 1999, the Company issued 6,070,000 shares of its $0.001 par
  value common stock to various investors for cash aggregating $728,400 or $.12
  per share.

-28-

Nation Energy, Inc.
  Notes to Financial Statements

On May 6, 1999, the Company issued 65,000 shares of the Company's common stock
  to the President of the Company for payment in full for consulting work performed
  on behalf of the Company and invoiced in the amount of $13,000 or $.20 per share. 
  These shares were valued at their fair market value on the date the Company
  agreed to issue the shares.

In addition, on May 6, 1999, the Company issued 35,000 shares of the Company's
  common stock to the treasurer of the Company for payment in full for legal work
  performed on behalf of the Company and invoiced in the amount of $7,000 or $.20
  per share.  These shares were valued at their fair market value on the
  date the Company agreed to issue the shares.

The Company began a private placement on March 1, 2000.  The private placement
  offered 4,500,000 shares of common stock at a price of $1.00 per share. 
  The private placement closed on January 22, 2001 with a total of 3,850,000 shares
  subscribed.  The subscribed shares were also issued during January 2001.

The Company has received services from a related party with an estimated value
  of $15,000 and $20,000 for the year ending March 31, 2001 and 2000, respectively. 
  The Company has recorded the value of the services received as additional paid-in
  capital.
Note 5.  AGREEMENTS
On August 11, 1999, the Company signed a letter of intent with Saurus Resources
  Inc., giving the Company the option to enter into a joint venture with Saurus
  under which the Company may acquire up to 50% of the profits resulting from
  oil and gas development by the venture in the Greater Trona Area prospect, located
  in southwest Wyoming. Saurus currently has an interest in 11,960 acres and is
  negotiating to acquire an interest in an additional 10,155 acres in the Greater
  Trona Area prospect. Under the terms of the letter, the Company paid for a study
  reporting on the economic and geologic merits of the Trona venture and had until
  September 15, 1999, to enter into a joint venture with Saurus. On October 1,
  1999, the Company elected to proceed with the joint venture. The operating agreement
  was signed and dated December 1, 1999.  During the year ended March 31,
  2001 the Company had advanced sufficient funds to earn the right to 50% of the
  profits of the Greater Trona Area joint venture.  As of March 31, 2001
  the joint venture had not generated any revenues (see Note 8).

Note 6.  INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
  Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"),
  which requires use of the liability method.  SFAS No.  109 provides
  that deferred tax assets and liabilities are recorded based on the differences
  between the tax bases of assets and liabilities and their carrying amounts for
  financial reporting purposes, referred to as temporary differences.  Deferred
  tax assets and liabilities at the end of each period are determined using the
  currently enacted tax rates applied to taxable income in the periods in which
  the deferred tax assets and liabilities are expected to be settled or realized.

-29-


Nation Energy, Inc.
  Notes to Financial Statements
The types of temporary differences between the tax basis of assets and their
  financial reporting amounts that give rise to a significant portion of the deferred
  tax asset are as follows:

Reconciling
         Item
    Tax 
        EffectNet operating loss carryforward
    $165,000
    $56,000The net operating loss carryforward will expire through 2020.  The deferred
  tax asset has been fully reserved at March 31, 2001.  The change in the
  valuation allowance during the year ended March 31, 2001 was $52,400.

The provision for income taxes differs from the amount computed by applying
  the statutory federal income tax rate of 34% to income before income taxes due
  to the effect of the net operating loss.  The net operating loss negates
  any provision for income taxes.

Note 7. RELATED PARTY TRANSACTION
During the year ended March 31, 2001, the Company entered into a verbal agreement
  with a related party to receive administrative services.  The agreement
  calls for monthly payments of $3,000 plus reimbursement of direct costs.  
  For the year ended March 31, 2001 the Company has accrued $15,227 of expense
  related to this agreement.  Prior to this agreement the Company was recording
  $5,000 on quarterly basis for administrative services provided by this related
  party as additional paid-in capital.  For the year ending March 31, 2001
  and 2000 the Company had recorded $20,000 and $15,000, respectively, as additional
  paid-in capital related to this agreement.

The Company had a subscription for 3,000,000 shares of its common stock at $1.00
  a share from an affiliated company of an officer and director of Nation Energy. 
  The officer and director of Nation Energy is also a director of the affiliated
  company.  The subscription was converted into common stock during January
  2001.

Note 8. CORRECTION OF AN ERROR
The accompanying financial statements for the year ended March 31, 2001 have
  been restated to correct an error in recording services contributed by a related
  party and an asset impairment related to the Company's unproved oil and gas
  properties.  The value of the services provided by the related party was
  estimated at $15,000.  The effect of the restatement was to decrease net
  income by $753,675.  The effect on net (loss) per common share was to increase
  net (loss) per common share from $(0.01) too $(0.10).

The accompanying financial statements for the year ended March 31, 2000 have
  been restated to correct an error in recording services contributed by a related
  party and an asset impairment related to the Company's unproved oil and gas
  properties.  The value of the services provided by the related party was
  estimated at $20,000.  The asset impairment was estimated to be $60,0000. 
  The effect of the restatement was to decrease net income for the year ending
  March 31, 2000 by $80,000.  The change in net (loss) per common share related
  to the correction of the error is not considered significant.

-30-

Nation Energy, Inc.
  Notes to Financial Statements

Note 9. SALE OF UNPROVEN OIL AND GAS PROPERTIES (UNAUDITED)
During February 2001 the Company entered into an agreement to sell its unproven
  oil and gas properties for cash of $2,165,780 and a royalty interest in the
  project subject to the approval of its shareholders.  Subsequent to March
  31, 2001, the Company filed a proxy statement to obtain approval for this transaction.

The proforma effect of this transaction would be as follows:

The Company would receive gross proceeds of $2,165,780
  The Company would transfer their interest in unproved oil
    and gas properties
  The Company would have no material income tax consequences
    since the purchase price approximates the tax basis of the unproved oil and
    gas properties-31-

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

PART III

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

The directors and executive officers of the Company and their respective ages
  are as follows:

Name
      Age
      PositionJohn R. Hislop
      48
      Chairman of the Board of Directors, VicePresident and Chief Financial Officer,Secretary, DirectorDonald A. Sharpe
      43
      President, Chief Executive Office, Director

All directors hold office until the next annual meeting of stockholders and/or
  until their successors have been duly elected and qualified. There are no agreements
  with respect to the election of directors. The Company has not compensated its
  directors for service on the Board of Directors or any committee thereof. Officers
  are appointed annually by the Board of Directors and each executive officer
  serves at the discretion of the Board of Directors. There are no other family
  relationships between any of the directors and executive officers. The Company
  does not have any standing committees at this time.

John R. Hislop, Chairman of the Board of Directors, Vice President and Chief
  Financial Officer, Secretary and Director

Mr. Hislop has been Chairman, Vice President, Chief Financial Officer and Secretary
  and a director of the Company since June 1999. Since 1990 Mr. Hislop has been
  working as an independent financial consultant and has served as an officer
  and director of various emerging growth companies. He is currently a director
  of Cubix Investments, Ltd. (formerly named R.I.S. Resources International Corp.),
  a holding company for various public oil and gas and internet companies, and
  has been a director since February 1994 and served as President of Cubix Investments,
  Inc. from February 1994 to February 2001.

-32-

In the past five years Mr. Hislop has also been a director of the following
  companies: Gemini Energy Corp. (formerly known as Arrowhead Minerals Corp.)
  since March 1995 (Mr. Hislop also served as President from March 1997 to January
  1998), Ultra Petroleum Corp. from March 1993 to January 2001 (Mr. Hislop also
  served as President March 1993 to May 1996 and as CFO from May 1996 to September
  1998), Ariel Resources, Ltd. from December 1991 to March 2000 (Mr. Hislop also
  served as CFO from December 1994 to December 1997), Rio Amarillo Mining Ltd.
  prior to April 1994, Spectrum Resources, Ltd. from September 1996 to November
  1997, Luxmatic Technologies N.V. since October 1997 (Mr. Hislop has also served
  as President since 1997), KinYSIS Pharmaceutical, Inc. from July 1997 to October
  1997 (Mr. Hislop also served as President, Secretary, CEO and CFO from July
  1997 to August 1997), Ultra Holdings Inc. since July 1999 (Mr. Hislop also has
  served as President since July 1999), Zconnexx Corporation (formerly known as
  Capital Charter Corp.) from November 1998 to May 2000, Netco Energy Inc. (formerly
  known as Green River Holdings Inc. and Green River Petroleum, Inc.) since June
  1999, and Patriot Capital Corp. since April 1999.  Mr. Hislop trained as
  a Chartered Accountant with Ernst & Young and has a bachelor of Commerce
  in Finance from the University of British Columbia.

Donald A. Sharpe, President, Chief Executive Officer, Director

Mr. Sharpe has been the President, CEO and a director of the Company since June
  1999. As President, CEO and a member of the Board of Directors since 1997 of
  Netco Energy Inc. (formerly known as Green River Holdings, Inc.), a public company
  located in Vancouver, British Columbia, Mr. Sharpe oversaw the reorganization
  and initial financing of that company,. Mr. Sharpe was responsible for the negotiations
  and completion of Netco Energy's large-scale farm-in arrangement that resulted
  in oil and gas interests in more than 64,000 acres in the Green River basin
  of Wyoming. Prior to his tenure at Netco Energy Mr. Sharpe was President and
  Director of JABA Inc., of Vancouver, British Columbia, from April 1995 to November
  1997. As President, Mr. Sharpe was responsible for the administration of the
  public company, coordinated the financing of the company, and the filing of
  the plan of reactivation which the Company used to begin trading on the Alberta
  Stock Exchange. Mr. Sharpe was also responsible for securing joint venture partners
  for the company's projects in the Southwestern U.S. and Northern Mexico. From
  1981 to 1994 Mr. Sharpe was a Geophysicist with Suncor Inc., of Calgary Alberta
  where Mr. Sharpe held positions of increasing responsibility in the areas of
  exploration, management and marketing.

Over the past five years Mr. Sharpe has also been director of the following
  companies: Zconnexx Corporation (formerly known as Capital Charter Corporation)
  from November 1998 to March 2000, UKT Recycling Technologies Inc. from November
  1994 to January 1999 (Mr. Sharpe was also Chairman from January 1996 to January
  1999 and CEO from January 1996 to January 1998), Velvet Exploration Company,
  Ltd. from November 1996 to November 1998, Patriot Capital Corp. since June 1999
  (Mr. Sharpe has also been the President and CEO since 1999), Daybreak Resources
  Corp. since April 1999, Gemini Energy Corp. since October 2000 (Mr. Sharpe has
  also been President since 2000), and Empress Capital Corp from April 1999 to
  May 2000 (Mr. Sharpe was also President and CEO during that term). Mr. Sharpe
  received his B.Sc. in Geophysics from the University of British Columbia and
  Certificate in Business Management from the University of Calgary.

Initial Statements of  Beneficial Ownership of Securities on Securities
  and Exchange Commission Form 3 were not filed timely by John R. Hislop, Donald
  A. Sharpe and beneficial owners of more than 10% of the Company's securities
  during the fiscal year ended March 31, 2001.

-33-

ITEM 10. EXECUTIVE COMPENSATION

The Summary Compensation Table shows certain compensation information for the
  Chief Executive Officer. Compensation data for other executive officers is not
  presented in the graphs because aggregate annual compensation for such officers
  does not exceed $100,000. This information includes the dollar value of base
  salaries, bonus awards, the number of stock appreciation rights/options granted,
  and certain other compensation, if any, whether paid or deferred.

SUMMARY COMPENSATION TABLE

The following table sets forth the aggregate compensation paid by the Company
  to its Chief Executive Officer for services rendered during the periods indicated:

Name and
          Principal
          Position
      
      Year
      Annual 
          Compensation
      Long Term 
          Compensation AwardsSalary
      Other Annual 
          Compensation
      Restricted
          Stock Awards
      Securities
           Underlying 
          Options/SARs
      All other
          compensationDonald A. Sharpe, CEO
      
      2001(1)
      $0
      $0
      0
      0
      0Jeffrey L. Taylor, CEO
      
      2001(1)
      $0
      $0
      0
      0
      0(2)

(1) The results reported in the "Summary Compensation Table" for the
  period designated "2001" are for the current fiscal year ending March
  31, 2001. Mr. Taylor served as CEO and President of the Company from February
  8, 1999 to June 4, 1999. Mr. Sharpe has served as CEO and President of the Company
  since June 4, 1999. No executive officers of the corporation received any compensation
  during the fiscal year ended March 31, 1999 or prior to that date.

(2) Mr. Taylor was issued 65,000 shares of the Company's Common Stock then valued
  at $.20 per share on May 6, 1999 as compensation for consulting work performed
  on behalf of the Company not in connection with his services as President and
  CEO.

-34-

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, based upon the latest available filings with
  the Securities and Exchange Commission, the beneficial ownership of Nation Energy
  shares of each beneficial owner of 5% or more of Nation Energy's common stock
  known to Nation Energy.

Name and Address 
          of Beneficial Owner
      Amount and Nature 
          of Beneficial Owner
      Percent of
          ClassSinclair Publishing Limited(2)
          Palm Chambers
          Road Town, Tortola
          British Virgin Islands
      670,000(1)
      6.07%Lynx Knights de Finance SA(2)
          3076 Sir Francis Drake Highway
          Road Town, Tortola
          British Virgin Islands
      670,000(1)
      6.07%Westin Machineries Pension SA(2)
          3076 Sir Francis Drake Highway
          Road Town, Tortola
          British Virgin Islands
      670,000(1)
      6.07%Liegeman, SA(2)
          3076 Sir Francis Drake Highway
          Road Town, Tortola
          British Virgin Islands
      670,000(1)
      6.07%Croix Merchants & Barter(2)
          3076 Sir Francis Drake Highway
          Road Town, Tortola
          British Virgin Islands
      670,000(1)
      6.07%Jeffrey L. Taylor(3)
          500 N. Rainbow Blvd., Suite 300
          Las Vegas, NV 89107
      3,132,800(1)
      28.43%Crown Taylor(4)
      400,000(1)
      3.63%Sextan Capital, Inc.(5)
          Suite 1100-609 West Hastings Street
          Vancouver, B.C., Canada 
          V6B 4W4
      3,000,000(1)
      27.22%

-35-

_________________

(1)
    Holder of 5% or more of the common stock of Nation Energy.(2)
    Based solely on the representations of share ownership
        made by persons representing themselves as owners of Nation Energy's common
        stock in connection with the proxies solicited for the January 14, 2000
        meeting of Nation Energy's shareholders.  The identity of the beneficial
        owner of the shares held by such holder is not known to Nation Energy
        and there is no known affiliation between any such holder and Nation Energy
        or its known affiliates.(3)
    Based solely on Schedule 13D/A filed February 13, 2001(4)
    The Schedule 13D/A filed by Jeffrey Taylor on February
        13, 2001 indicates that Crown Taylor is a venture capital firm of which
        Jeffrey L. Taylor is a principal.(5)
    Based solely on Schedule 13D filed January 22, 2001. 
        Sextan Capital, Inc. is a wholly owned subsidiary of Cubix Investments,
        Inc.  John R. Hislop, Nation Energy's Chairman of the Board, Secretary
        and Vice President and Chief Financial Officer, is a director of Cubix
        Investments, Inc.The following table sets forth the beneficial ownership of Nation Energy shares
  held by executive officers and directors of the Company.

Name and Address 
          of Beneficial Owner
      Amount and Nature 
          of Beneficial Owner
      Percent of
          ClassDonald A. Sharpe, CEO and director
      230,000(1)
      2.087%

(1)  These shares were purchased on the open market.

Change of Control

A change of control of Nation Energy occurred during Nation Energy's fiscal
  year ended March 31, 2000.  Sextan Capital, Inc., a wholly owned subsidiary
  of Cubix Investments Inc., purchased 3,000,000 shares common stock of Nation
  Energy for $3,000,000, pursuant to a Stock Purchase Agreement, dated January
  22, 2001, between Nation Energy and Sextan.  See "CERTAIN RELATIONSHIPS
  AND RELATED PARTY TRANSACTIONS".

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Sextan Capital, Inc., a wholly owned subsidiary of Cubix Investments Inc., purchased
  3,000,000 shares common stock of Nation Energy for $3,000,000, pursuant to a
  Stock Purchase Agreement, dated January 22, 2001, between Nation Energy and
  Sextan.  As a result of this transaction, Sextan is the beneficial owner,
  directly or indirectly, of approximately 27% of the common stock of Nation Energy. 
  This transaction was reported on Form 8-K which was filed with the Securities
  and Exchange Commission on February 6, 2001.  Cubix Investments, Inc. (formerly
  named R.I.S. Resources International, Inc.) is a Bermuda corporation whose common
  stock is traded on the Canadian Venture Exchange.   John R. Hislop,
  Nation Energy's Chairman of the Board, Secretary and Vice President and Chief
  Financial Officer, is a director of Cubix Investments, Inc.

-36-

In this same private placement and also on January 22, 2000, Jeffrey L. Taylor
  acquired 65,000 shares and Crown Taylor acquired 400,000 shares.  According
  to the Schedule 13D/A filed by Jeffrey Taylor on February 13, 2001, Mr. Taylor
  is the beneficial owner of 3,132,800 shares of the Company's common stock and
  Crown Taylor is a venture capital firm of which Jeffrey L. Taylor is a principal.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

The following exhibits are attached to this report and are incorporated herein
  by reference:

Exhibit No.
    Exhibit Name2.1
    Purchase and Sale Agreement dated February 28, 2001(1)3.1
    Certificate of Incorporation of Company, filed December 16, 1999(2)3.2
    Certificate of Amendment of Certificate of Incorporation of Company, filed
        February 15, 2000(2)3.3
    Bylaws of the Company(2)10.1
    Joint Operating Agreement with Saurus Resources, Inc. dated December 1,
        1999(2)10.2
    1999 Stock Option and Incentive Plan(2)27.1
    Financial Data Schedule(1) Incorporated by reference from the Company's Consent Solicitation Statement
  on Schedule 14A filed with the Securities and Exchange Commission April 26,
  2001
  (2) Incorporated by reference from the Company's Form 10-SB filed with the Securities
  and Exchange Commission March 31, 2000

A Form 8-K was filed February 6, 2001 reporting the change in control of the
  issuer.

-37-

SIGNATURES 
  In accordance with the requirements of Section 13 or 15(d) of the Securities
  Exchange Act of 1934, the registrant caused this report to be signed on its
  behalf by the undersigned, thereunto duly authorized.

Date: September 26, 2001
    NATION ENERGY INC.
         (Registrant)

      By: /s/ Donald A. Sharpe
               Donald A. Sharpe,  CEOIn accordance with the Securities Exchange Act of 1934, this report has been
  signed below by the following persons on behalf of the registrant and in the
  capacities and on the dates indicated.

Name
      Title
      Date/s/ Donald A. Sharpe
      
      September 26, 2001Donald A. Sharpe
      President and Chief ExecutiveOfficer, Director(Principal Executive Officer)/s/ John R. Hislop
      
      September 26, 2001John R. Hislop
      Chairman of the Board of Directors,Vice President and Chief Financial Officer,and Secretary(Principal Financial and Accounting Officer)







-38-