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, 2000[  ]
  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. [X]

The issuer had no revenues for the fiscal year ended March 31, 2000.

The aggregate market value of the common stock held by non-affiliates of the
registrant at July 10, 2000, was approximately $9,407,040 based on the closing
price for the common stock on the OTC Bulletin Board. At June 19, 2000,
7,170,000 shares of registrant's common stock were outstanding.

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" on 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. (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 negotiating regarding 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 properties and has purchased two leases
totaling 560 acres in connection with that project. No assurance can be given
that the Company will be successful in its negotiations and will in fact
participate in exploration for hydrocarbons in this region or others or that
such exploration activities will be successful.

SELECTION OF TARGET AREAS FOR ACQUISITION

The Company's proposed plans call for it to consider several factors in
choosing a region for acquisition of oil and gas leases. The Company considers
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 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 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 will determine 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.

GEOLOGICAL AND GEOPHYSICAL TECHNIQUES

The Company may 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.-4-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 do so upon the successful
completion of a pending private offering of up to 4,500,000 shares of its
Common Stock at an offering price of $1.00 per share.  It is unclear
whether the Company will proceed with this offering.  See "MARKET FOR
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS."

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.

INITIAL FOCUS

The 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 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, and to date has advanced to Saurus payments totaling approximately
$638,000.-5-Under the arrangement 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. The Company expects to spend $525,000 on
drilling and completing approximately 10 wells to a minimum depth of 1,200
feet. If the cost of drilling and completing these wells is less than $525,000,
the Company will spend the difference on preparing the wells for production and
connecting the wells to a sales line. After spending the $525,000, the Company
will be deemed to have the right to 50% of the profits of the Greater Trona
Area joint venture.

On June 2, 2000 Saurus commenced drilling the first of the wells to be
drilled under the agreement. As of June 21, 2000 Saurus had drilled the first
three wells of the initial ten-well program. The Company and Saurus will
evaluate the results of the initial ten-well drilling program before making a
decision to proceed further with the Trona project.

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. Saurus will have this option for a period
of six months from the date of the completion of the last of the ten initial
wells discussed above.

The Greater Trona Area has a mature market for oil and gas production. The
area is serviced by numerous pipelines, providing the Company with access to a
number of potential buyers. The Company will be responsible for moving its oil
and gas production to the sales point. In the case of gas production, the sales
point will be at a pipeline interconnect. In the case of oil production, the
Company will have the option to sell at the wellhead or to elect to build a
tie-in pipeline. Because the areas in which the Company anticipates conducting
its oil and gas exploration have a good infrastructure of both oil and gas
pipelines, the distance to tie in, and therefore the cost, is expected to be
minimal.

At this time the Company has not yet identified any additional lands for
purchase.

RELIANCE ON MANAGEMENT

Investors will have to rely upon the judgment and ability of the Company's
management with regard to 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 participate in the Greater
Trona Area project and 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 ventures 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.
Further, no assurance can be given that even if the Company participates in
this project, the test well or any other wells drilled will be capable of
producing oil and/or gas in commercial quantities or that the venture will be
successful.

-6-POSSIBLE DRILL RIG OPERATION

Management is of the opinion that one of the ways to enhance the Company's
position in the development of oil and gas may be the purchase and operation of
drilling rigs. Though no assurances can be given that the Company will purchase
drilling rigs and enter into the drilling business nor that the Company will be
successful in such an enterprise, the Company is currently investigating the
purchase of used drilling rigs.

The Company would have the option to enter into different types of drilling
contracts with operators, each with varying degrees of risk and reward. There
are three basic types of contract used in the oil and gas industry:
"daywork," "footage," and "turnkey". Pursuant to
a daywork contract the rig and necessary personnel are contracted out at a
fixed day rate. Most risks and delays to drilling are born by the entity hiring
the rig. In footage contracts wells are drilled on a dollars per foot basis to
a designated depth. These contracts are more expensive because part of the
burdens for delays and the risk of drilling are born by the drilling contractor
and in part by the entity hiring the rig. A turnkey contract is a well drilled
by the contractor for a fixed price. This type of contract bears the greatest
risk for the drilling contractor, but this risk is usually reflected in the
contract with a substantial increase in service costs or through a substantial
participation by the drilling contractor in the well if it is successful. If
and when the Company purchases drilling rigs, management will decide on a deal
by deal basis after evaluation of the particular risks and circumstances which
type of drilling contract, in its sole discretion, will best serve the
interests of the Company.

COMPETITION

The oil and gas industry is highly competitive. Competition for prospects
and producing properties is intense. The Company 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.-7-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

The Company currently has no employees other than its officers and
directors. None of the officers and directors are employed by the Company on a
full-time basis. Management of the Company expects to hire additional employees
as needed. Management currently estimates that the Company will not hire any
employees in the next twelve months.

ENVIRONMENTAL LAWS

The Company intends to conduct its operations in compliance with all
applicable environmental laws. The cost of such compliance will be factored in
to 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
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 the drill rig operations 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.  The Company has considered these
factors in its decision to proceed with the Trona joint venture and will
consider these factors when it evaluates future exploration and development
projects.

ITEM 2. DESCRIPTION OF PROPERTY

PRINCIPAL PROPERTY

The principal real estate utilized by the Company is located in the Greater
Trona Area (which lies in Sweetwater County, 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 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.-8-On October 1, 1999, the Company elected to proceed with the joint venture
and the Company and Saurus Resources, Inc. entered into a definitive Joint
Operating Agreement on December 1, 1999. Under their agreement, the Company and
Saurus agree to jointly develop their respective interests in land within the
Greater Trona area. As of July 14, 2000, the Company has advanced a total of
approximately $638,000 under its 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. As of July 14, 2000, the Company expects to spend
$525,000 on drilling and completing approximately 10 wells to a minimum depth
of 1,200 feet. If the cost of drilling and completing these wells is less than
$525,000, the Company will spend the difference on preparing the wells for production
and connecting the wells to a sales line. The Company cannot assess the
likelihood that such costs will fall below $525,000. After spending the
$525,000, the Company will be deemed to have the right to 50% of the profits of
the Greater Trona Area joint venture. The agreement terminates only upon the
event that Saurus or the Company lose their respective rights to develop within
the Greater Trona Area.

The Company has entered into an arrangement to lease from the State of
Wyoming oil and gas rights to 320 acres located in the Greater Trona Area. This
lease has a five year term beginning December 8, 1999 and under the terms of
the lease one-sixth of the royalties earned by the Company for development on
the leased lands are payable to the state of Wyoming. The Company has entered
into an arrangement to lease from the United States Department of the Interior,
Bureau of Land Management, oil and gas rights to 240 acres located in the
Greater Trona Area. This lease has a ten year term beginning February 1, 2000
and under the terms of the lease one-eighth of the royalties earned by the
Company for development on the leased lands are payable to the United States.
The Company has not received from either the State of Wyoming or the Department
of Interior the final forms of the definitive agreements representing such
leases.

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. Saurus will have this option for a period
of six months from the date of the completion of the last of the ten initial
wells discussed above. At this time the Company has not identified any
additional lands for purchase.

The Company does not plan to make any investments in real estate mortgages,
in securities of persons primarily engaged in real estate activities or, except
as described above, in real estate or interests in real estate. The only other
real property utilized by the Company is the office space located at Suite 1100
- 609 West Hastings Street, Vancouver BC Canada V6B 4W4, which is used without
charge by the Company under an oral arrangement with the lessor of the property,
Caravel Management Corp.  Caravel Management Corp. is a management company
that is wholly-owned by John R. Hislop, the Company's chairman of the Board,
Secretary and Vice President and Chief Financial Officer.  However, should this oral arrangement be terminated or
should the Company require a larger space to conduct its operations, the
Company would be required lease office space.  The Company does not
believe this is likely to happen, and should the Company be required to lease
office space, any cost associated with such lease would not be material to the
Company.-9-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. On June 2,
2000 the operator of the Trona project, Saurus Resources Inc., commenced
drilling on the Trona project. As of June 21, 2000 three wells of the initial
ten well program had been drilled and were awaiting evaluation.

ITEM 3. LEGAL PROCEEDINGS

None.

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

On January 14, 2000, the Company held its annual meeting of shareholders. At
the January 14, 2000 annual meeting, Donald A. Sharpe, John R. Hislop and
Darrell Brookstein were elected as directors of the Company. Subsequent to the
annual meeting, Darrell Brookstein resigned as a director for personal reasons.
The Company has no other directors.

The matters voted upon in the January 14, 2000 annual meeting and the number
of votes cast for and against, as well as the number of broker non-votes and
abstentions, were as follows:

(i) The following nominees were elected to serve on the board of directors
of the Company until the Company's next annual meeting of shareholders or until
their successors are elected and qualified, and each received 5,831,000 votes,
which represented approximately 81% of the shares outstanding. Each nominee
received the number of votes set opposite their respective name:

For
  Against orwithheld
  Abstain
  Broker non-votesDonald A. Sharpe
  5,831,000
  0
  0
  0John R. Hislop
  5,831,000
  0
  0
  0Darrell Brookstein
  5,831,000
  0
  0
  0(ii) A proposal to ratify the Articles of Amendment to the Articles of
Incorporation of the Company that were approved by written consent of a
majority of shareholders and filed with the Florida Secretary of State on
September 16, 1998 was approved by the shareholders of the Company with the
following votes:

For
  Against orwithheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0-10-The September 16, 1998 amendments to the Company's Articles of Incorporation
provided for the following changes: (1) the outstanding Common Stock of the
Company was split 1,000 for one (i.e. following the effectiveness of the Amendments,
each share of Common Stock of the Company became 1,000 shares of Common Stock
of the Company); (2) the authorized capital of the Company was increased from
1,000 shares of Common Stock, par value $1.00 per share, to 50,000,000 shares
of Common Stock, $0.001 par value per share; (3) the address of Company's
principal place of business within Florida was updated; (4) it was provided
that the number of directors of the company shall be established by the Bylaws
of the company but shall not be less than one; (5) it was provided that the
shareholders of the Company shall not have any preemptive rights except as
established in the Articles of Incorporation or by resolution of the Board of
Directors (generally speaking, a preemptive right is a right of first refusal
to acquire shares issued by the Company); (6) it was provided that the Bylaws
of the Company may only be adopted, modified or repealed upon a vote of the
shareholders of the Company holding a majority of the shares entitled to vote
thereon; (7) the Board of Directors was authorized to make reasonable rules to
determine the time, place and conditions under which the books and records of
the Company will be subject to inspection by its shareholders; (8) it was
provided that any provisions relating to a "control share
acquisition" under the Florida Business Corporation Act shall not apply to
the Company (the "control share acquisition" provisions provide that,
unless the articles of incorporation of a company provide otherwise, the voting
rights of shares which following their acquisition would give the holder
thereof voting power in excess of certain stated percentage limits will be
limited to only such voting rights as shall be approved by the shareholders of
such company); (9) it was provided that the holders of one-third of the voting
shares of the Company shall constitute a quorum for purposes of shareholders'
meetings; (10) it was provided that actions by shareholders of the Company
shall require a vote of 50.01% to be effective; (11) the liability of directors
and officers of the Company was limited to the fullest extent permitted by law
and the Company was authorized to undertake, either in its Bylaws or by action
of its shareholders or Board of Directors, to indemnify its directors and officers
against any contingency or peril determined to be in the best interest of the
Company and to procure insurance to cover such indemnity; and (12) no contract
or transaction of the Company shall be affected by the fact that an officer or
director of the Company has an interest in such contract or transaction.

The September 16, 1998 amendments were at that time approved by written
consent of Roy Meadows, who at the time of such consent was the beneficial
owner of Common Stock representing 97.5% of the capital stock of the Company.

(iii) A proposal to reincorporate the Company under the laws of the State of
Delaware by means of a merger of the Company with and into a newly formed
wholly-owned subsidiary incorporated in the State of Delaware was approved by the
shareholders with following votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0-11-Following its approval by the shareholders, the reincorporation in Delaware
was effected on February 10, 2000. In connection with and by operation of the
reincorporation, the Company was authorized to issue preferred stock, par value
$.001 per share, with the right conferred upon the board of directors to set
the dividend, voting, conversion, liquidation and other rights as well as such
redemption or sinking fund provisions and the qualifications, limitations and
restrictions with respect thereto of such preferred stock as they may determine
from time to time. Under the proposal approved by the Shareholders, the number
of shares of preferred stock available for issuance is 5,000,000 shares. The
reincorporation in Delaware did not result in any change in the business,
management, assets, liabilities or net worth of the Company.

The reincorporation in Delaware was undertaken to allow the Company to take
advantage of certain provisions of the corporate laws of Delaware and to
authorize the Company to issue preferred stock. The Board of Directors of the
Company believes that the reincorporation has provided and will provide
flexibility for both the management and business of the Company. Delaware is
recognized both domestically and internationally as a favorable legal and
regulatory environment within which to operate. Such an environment will
enhance the Company's operations and its ability to effect acquisitions and
other transactions. For many years, Delaware has followed a policy of
encouraging incorporation in that state and, in furtherance of that policy, has
adopted comprehensive, modern and flexible corporate laws which are
periodically updated and revised to meet changing business needs. As a result,
many major companies have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware companies, thereby providing greater
predictability with respect to corporate legal affairs.

(iv) A proposal to adopt the Company's 1999 Stock Option and Incentive Plan
was approved by the shareholders with the following votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0On May 6, 1999, the Board of Directors of the Company adopted the Company's
1999 Stock Option and Incentive Plan, subject to shareholder approval, which
approval was obtained at the January 14, 2000 meeting of shareholders. The
Board of Directors previously found that stock options are desirable (1) as an
effective incentive for participating key employees, consultants and Directors
to use their judgment, initiative and efforts to ensure the successful conduct
of the Company's business, (2) to further align the interests of such
employees, consultants and Directors with those of the Company's shareholders
by providing an opportunity to increase their stock ownership, and (3) to
encourage such employees, consultants and Directors to remain in the service of
the Company. Pursuant to the 1999 Plan, participants may be granted stock
options to acquire common stock of the Company, which may be incentive stock
options or non-qualified stock options.-12-The total number of options authorized under the 1999 Plan is 2,500,000
shares of the Company's common stock (which number is subject to adjustment in
the event of stock dividends, stock splits and other similar events). To the
extent that options granted under the 1999 Plan expire or terminate without
having been exercised, the shares of the Company's common stock covered by such
options will again become available for award. The 1999 Plan is administered by
the Company's Board of Directors or, if the Board of Directors so elects, an
option committee of the Board of Directors will be created by the Board of
Directors, which will have authority to administer the 1999 Plan. The Board of
Directors or any option committee appointed thereby have the authority to
determine the employees to whom options will be granted, the time when such
Options shall be granted, the number of shares which shall be subject to each
option (subject to certain limitations in the case of incentive stock options),
the purchase price or exercise price of each option (no less than 100% of fair
market value for incentive stock options), the period(s) during which such
options shall be exercisable (whether in whole or in part) and the other terms
and provisions thereof. Generally, options may be granted only to employees
employed and consultants and vendors engaged by the Company or any subsidiary
of the Company. Directors of the Company and its subsidiaries are also eligible
to participate. Consultants and vendors are eligible to receive awards of
non-qualified stock options, but are not eligible to receive incentive stock
options.

(v) A proposal to ratify the issuance of 100,000 shares of
the Company's common stock to Jeffrey L. Taylor and Gregory W. Gibson, former
directors of the Company, was approved by the shareholders with the following
votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,823,000
  8,000
  0
  0In a special meeting of the Board of Directors held May 6, 1999, Jeffrey L.
Taylor ("Taylor") and Gregory V. Gibson ("Gibson"), who
then constituted all of the directors of the Company, passed a resolution
granting an aggregate of 100,000 shares of the Company's Common Stock to
themselves for services rendered to the Company. Through his company London
Taylor Group, Taylor presented the Company with an invoice dated April 29, 1999
in the amount of $13,000 for twenty-six hours of consulting services rendered.
These services included strategic planning for the Company's drilling business,
negotiation of an option to purchase drilling equipment and financial planning
services. By its resolution of May 6, 1999, the Board of Directors issued to
Taylor 65,000 shares of the Company's common Stock as payment in full for the
April 29, 1999 invoice. The law firm of Gibson, Hagland & Johnson, of which
Gibson is a principal, presented an invoice to the Company dated April 29, 1999
in the amount of $7,000 for legal services rendered in connection with the
preparation of the Company's 1999 Stock Option and Incentive Plan. By its
resolution of May 6, 1999, the Board of Directors issued to Gibson 35,000
shares of the Company's Common Stock as payment in full for the April 29, 1999
invoice.

(vi) A proposal to create a series of preferred stock with such rights,
privileges and preferences as the Board of Directors may determine from time to
time was approved by the shareholders with the following votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0-13-On December 14, 1999, the Company's board of directors unanimously approved
and recommended that the Company's Shareholders consider and approve an
amendment to Article IV of the Company's Articles of Incorporation that would
authorize a series of preferred stock, par value $.001 per share, with the
right conferred upon the board of directors to set the dividend, voting,
conversion, liquidation and other rights as well as such redemption or sinking
fund provisions and the qualifications, limitations and restrictions with
respect thereto of such preferred stock as they may determine from time to time
(such preferred stock is often referred to as "blank-check
preferred"). Under the proposal approved by the Shareholders, the number
of shares of preferred stock available for issuance is 5,000,000 shares. The
reincorporation in Delaware separately had the effect of authorizing a class of
5,000,000 shares of blank check preferred stock (the proposal was put to a
separate vote of shareholders in case the reincorporation was not approved by
the shareholders).

Prior to the reincorporation, the Company was not authorized to issue any
preferred stock (or any other class of capital stock other common stock). The
creation of the new preferred stock was recommended by the board of directors
to provide the board of directors with the necessary flexibility to issue
preferred stock in connection with acquisitions, merger transactions or
financings without the expense and delay incidental to obtaining shareholder
approval of an amendment to the Company's Certificate of Incorporation at the
time of such action.

(vii) The proposal to authorize the Board of Directors to change the name of
the Company to an as yet undetermined name if the Board of Directors determines
that such a name change is in the best interests of the Company was approved by
the shareholders with the following votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0As approved by the shareholders of the Company, this proposal granted the
Board of Directors the authority to amend Article I of the Company's
Certificate of Incorporation to change the name of the Company to any name
approved by the Board of Directors upon a determination by the Board of
Directors that such a name change is in the best interests of the Company. No
further action of the shareholders of the Company would be required to
authorize such name change. The board of directors exercised the authority
granted in this proposal on January 25, 2000 by adopting a resolution to change
the Company's name from Excalibur Contracting, Inc. to Nation Energy, Inc. A
certificate of amendment amending Article I of the Company's Certificate of
Incorporation to effect such name change was filed with the Delaware Secretary
of State on February 15, 2000.

(viii) The resolution ratifying the appointment of Stark Tinter &
Associates LLC as the Company's independent auditors for the fiscal year ending
March 31, 2000 was approved by the shareholders with the following votes:

For
  Against or withheld
  Abstain
  Broker non-votes5,831,000
  0
  0
  0No further actions were taken at the annual meeting of shareholders held
January 14, 2000.

-14-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 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, 2000 to June 30, 2000, the average
daily volume of the Company's Common Stock was less than 150 shares per day.

Period (1)(2)
  High
  LowFirst quarter 1999
  .625
  .625Second quarter 1999
  1.25
  .125Third quarter 1999
  1.50
  1.00Fourth quarter 1999
  1.25
  .875First quarter 2000
  3.00
  1.0625Fourth quarter 2000
  5.00
  1.3125(1) Calendar quarters.

(2) Source: Nasdaq Trading and Market Services and BigCharts.com

(b)          
Stockholders.

As of June 19, 2000 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.-15-The Company has had pending a private offering of up to 4,500,000 shares of
its Common Stock at an offering price of $1.00 per share for several months. It
is unclear whether the Company will proceed with this offering. Net proceeds
from this offering, should it proceed (after deducting expenses of the Offering
estimated to be $10,000) are expected to be $4,490,000 if all of the shares
proposed to be offered are sold. The Company has received subscriptions
totaling $3,500,000 which have not yet been accepted by the Company. The
Company intends to use al1 of the foregoing amounts for working capital. This
offering shall be exempt from registration pursuant to Regulation D under the
Securities Act of 1933 and is not being underwritten. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS--Private Placement."

In February of 1999, the Company completed a private offering pursuant to
Regulation D under the Securities Act of 1933 whereby it placed 6,070,000
shares of its Common Stock for a purchase price of $.12 per share. This
offering was not underwritten.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

The Company is a shell company and has not conducted any significant
operations to date.  The Company entered with Saurus Resources into a
definitive Joint Operating Agreement on December 1, 1999, under which the
Company and Saurus Resources agreed to jointly develop their respective
interests in land within the Greater Trona Area and the Company could
participate in up to 50% of the profits therefrom located in and around
Sweetwater County, Wyoming.  See "DESCRIPTION OF THE BUSINESS--The Company"
and "MANAGEMENT'S DISCUSSION AND ANALYSIS--Initial Focus" and
"DESCRIPTION OF PROPERTY--Principal Property."

REVENUES

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

PLAN OF OPERATION

The Company has conducted no significant operations. 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
with Saurus Resources Inc., described below in "--Initial Focus," for
the exploration of properties and has purchased two leases totaling 560 acres
in the Greater Trona Area, Wyoming, under this agreement. During the next
twelve months the Company plans to focus its resources on exploring this region
and evaluating additional opportunities for developing oil and gas projects.

During the next twelve months the Company's proposed plans call for it to
analyze additional regions for acquisition of oil and gas leases based on
several factors. The Company considers those regions in which its industry
contacts have the most experience in order to benefit from such experience. The
Company will determine 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.

-16-INITIAL FOCUS

The principal activity for the Company in the next twelve months and beyond
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 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, and has advanced the initial payment of $202,131 U.S.

Under the arrangement 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. The Company expects to spend $525,000 US on
drilling and completing approximately 10 wells to a minimum depth of 1,200
feet. If the cost of drilling and completing these wells is less than $525,000
US, the Company will spend the difference on preparing the wells for production
and connecting the wells to a sales line. After spending the $525,000 US, the
Company will be deemed to have the right to 50% of the profits of the Greater
Trona Area 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. Saurus will have this option for a period
of six months from the date of the completion of the last of the ten initial
wells discussed above. At this time the Company has not identified any additional
lands for purchase.

To date, the Company has purchased one state of Wyoming lease totaling 320
acres and one federal lease totaling 240 acres. The state lease has a term of
five years and carries a one-sixth royalty and the federal lease has a term of
ten-year term with a one-eighth royalty. Both leases are in the first year of
their term.

The Company does not foresee hiring any additional employees in the next
twelve months.

Capital acquisitions over the next twelve months are expected to total
$200,000. These capital acquisitions will consist of wellhead, tie-in and
compression equipment needed to produce gas in the event the Company's
exploration wells are successful. The Company has enough cash to meet its
obligations in the Greater Trona joint venture.

-17-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.

POSSIBLE DRILL RIG OPERATION

Management is of the opinion that one of the ways to enhance the Company's
position in the development of oil and gas may be the purchase and operation of
drilling rigs. Though no assurances can be given that the Company will purchase
drilling rigs and enter into the drilling business nor that the Company will be
successful in such an enterprise, the Company is currently investigating the
purchase of used drilling rigs and could possibly apply the proceeds of the
offering described at "--PRIVATE PLACEMENT," below,  to obtain
one or more drilling rigs.  See "DESCRIPTION OF BUSINESS -- POSSIBLE
DRILL RIG OPERATION."

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 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
12,000 acres, and it is possible that the parties may acquire rights to up to
an additional 11,000 acres in the near future), 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.-18-The Company has no operating history. The Company does not expect to
generate sufficient revenues within the foreseeable future to support the
expenses of its development and marketing activities and therefore will need to
rely upon significant additional funding to implement its development plans. It
is anticipated that this funding will be accomplished through the sale of the
Company's equity securities or through borrowing. Prior to March, 2000, the
Company has sold 7,170,000 shares of its Common Stock for approximately
$728,400 prior to deduction of offering expenses. The Company intends to raise
future requisite funds by subsequent offerings of its Common Stock and will not
be able to institute its full plan of operation without significant additional
funding. The Company has had pending a private placement of its Common Stock
the gross proceeds of which, should it proceed, will amount to $4,500,000
assuming that all of the shares offered for sale are sold. See "--PRIVATE
PLACEMENT," below. As of its audited financial statements of March 31,
2000 the Company had assets of $4,125,859. The foregoing funds will be and have
been mainly used by the Company to develop, exploit and market oil and gas
projects. $3,500,000 of such funds are cash advanced for subscriptions for
common stock in the private placement that have not yet closed. If the private
placement does not close, such funds will be returned to the subscribers. The
Company currently anticipates that, assuming that all of the shares offered for
sale are sold, this private placement will satisfy the cash requirements of the
Company for the next twelve months. If the Company does not proceed with this
private placement, the Company will need to obtain alternative financing to
pursue its plan of operations.

PRIVATE PLACEMENT

The Company has pending a private offering of up to 4,500,000 shares of its
Common Stock at an offering price of $1.00 per share. This offering has been
pending for several months and it is unclear whether or not it will ultimately
close, although as of March 31, 2000 the minimum number of shares that needed
to be subscribed has been exceeded. Net proceeds from this offering, should it
proceed (after deducting expenses of the offering estimated to be $10,000) is
expected to be $4,490,000 if all of the Shares are sold. The Company intends to
use al1 of the foregoing amounts for working capital. Funds will be used as
general working capital including but not limited to, obtaining oil and/or gas
leases, hiring executive and support personnel, and obtaining facilities to
conduct operations, and inventory equipment. At present the Company is
negotiating regarding several projects and has entered into a joint operating
agreement with Saurus Resources, Inc. for an option on a 50% interest in a
project in the Greater Trona Prospect, located in southwest Wyoming. The
Company has also purchased two oil and gas leases totaling 560 acres. No
assurance can be given that the Company will be able to obtain such additional
arrangements as will be necessary to develop and implement its plan in a timely
manner or if implemented that said enterprise will be profitable. No assurance
can be given that significant revenues will be derived from the development and
operation of the Company's development plans. Until required for specific
purposes, the net proceeds of the offering may be invested temporarily in
short-term obligations such as short-term government obligations.

The Company has received advances for subscriptions totaling $3,500,000.
These subscriptions have not yet been accepted by the Company and are being
held subject to such acceptance and the final closing of the private placement.
Of the 3,500,000 shares currently subscribed for, 3,000,000 have been
subscribed for by Cubix Investments, Inc., a British Columbia, Canada
corporation whose Common Stock is traded on the Canadian Venture Exchange. John
R. Hislop, the Company's chairman of the Board, Secretary and Vice President
and Chief Financial Officer, is the President and a director of Cubix
Investments, Inc. See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTION."-19-The Company can only estimate the future use of proceeds based on the
current status of the Company's operations, its current plans and current
economic condition. Due to the uncertainties of fund raising and negotiations,
the Company is unable to predict precisely what amount will be used for any
particular purpose. The Company will apply the proceeds of this offering in
such manner as it deems appropriate under the then existing circumstances. The
Company reserves the right to amend the use of proceeds by vote of a majority
of the Board of Directors.

Should the offering not proceed under its current terms, the Company will be
required to pursue alternative sources of capital. Without additional capital,
the Company's ability to pursue its plan of operations will be severely
curtailed.

EMPLOYEES

The Company currently has no employees other than its Officers and
Directors. Management of the Company expects to hire additional employees as
needed. Management currently estimates that the Company will not hire any
employees in the next twelve months.

INVESTMENT CONSIDERATIONS

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.
The Company is a shell company and is subject to all the risks inherent in the
creation of a new business. The Company has no employees other than its
management team and no set business plan. 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 plans
will prove successful. If the Company's plans prove to be unsuccessful,
investors in the Company may lose all or a substantial part of their
investment.

No Contracted Projects. The Company
is a shell corporation in its initial stages of development and it has only
entered into one agreement for the exploration of oil and gas. There is no
assurance that the Company will be able to raise funds in a timely manner or
successfully enter into other agreements with regards to any of its current
prospects or, if such agreements are entered into, that it will be successful
in its exploration activities. See "DESCRIPTION
OF BUSINESS."

-20-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, 2000 to June
30, 2000, the average daily trading volume of the Company's Common Stock was
less than 150 shares per day. On many days there is no trading activity in the
Company's Common Stock at all

Wildcat Drilling. The Company
expects to engage in the 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.
Recently the price of oil and gas has been subject to substantial
volatility.  For example, from June 1999 to March 2000, the historical
monthly average NYMEX price for crude oil has varied from $18 per barrel to
over $30 per barrel, and the historical monthly average NYMEX price for natural
gas has varied from less than $2.50 to nearly $3.00 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.

Availability of Suitable Prospects or Producing
Properties. Competition for prospects and producing properties is
intense. The Company 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 sell
prospectus or 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.

-21-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 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.

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 Subsequent Funding. The
Company believes it will need to raise substantial additional funds in order to
maintain its operations. The Company's continued operations therefore will
depend upon its ability to raise additional funds through bank borrowings or
equity or debt financing. There is no assurance that the Company will be able
to obtain additional funding when needed, or that such funding, if available,
can be obtained on terms acceptable to the Company. If the Company cannot
obtain needed funds, it may be forced to curtail or cease its activities. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS--LIQUIDITY AND CAPITAL RESOURCES."

Need for Additional Key Personnel.
At present, the Company employs no full time employees. The success of the
Company's proposed business will 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.-22-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.

-23-ITEM 7. FINANCIAL STATEMENTS







Nation Energy, Inc.
As of March 31, 2000 and for the
Years Ended March 31, 2000 and 1999,-24-Nation Energy, Inc.

Table of Contents

PageReport of Independent Auditors
  26Balance Sheet
  27Statements of Operations
  28Statement of Changes in Stockholders' Equity
  29Statements of Cash Flows
  30Notes to Financial Statements
  31-36

-25-REPORT OF INDEPENDENT AUDITORS

  Shareholders and Board of Directors
    Nation Energy, Inc. 
    Vancouver, B. C. Canada



We have audited the accompanying balance sheet of
Nation Energy, Inc. as of March 31, 2000, and the related statements of
operations, changes in stockholders' equity, and cash flows for the years ended
March 31, 2000 and 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.


We conducted our audits in accordance with
generally accepted auditing standards. 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, 2000, and the results of its operations,
and its cash flows for the years ended March 31, 2000 and 1999, in conformity
with generally accepted accounting principles.



As disclosed in Note 8 to the financial
statements, the Company has restated the financial statements as of March 31,
2000 to correct for an error in recording contributed services and an asset
impairment.


Stark Tinter & Associates, LLC
Denver, Colorado
June 27, 2000

-26-NATION ENERGY, INC.
Balance Sheet
March 31, 2000 
(Restated)

ASSETSCurrent assets:Cash
  $  
  3,894,349Prepaid expenses
  100,632Total current assets
  3,994,981Unproved oil and
  gas properties - full cost method
  130,878$  
  4,125,859LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable
  $        
  9,203Stockholders' equity:Common stock, $.001 par value;
  50,000,000shares authorized; 7,170,000 shares
  issuedand outstanding
  7,170Additional paid-in capital
  762,230Common stock subscriptions
  3,500,000Accumulated deficit
  (152,744)4,116,656$  
  4,125,859



The accompanying notes are an
integral part of the financial statements.

-27-NATION ENERGY, INC.
Statements of Operations 
(Restated)

For the
  
  For theYear Ended
  
  Year EndedMarch 31, 2000
  
  March 31, 1999Revenue:
        $                    -
        
        $                    -Costs and
  expenses:General, selling and administrative
        63,808
        
        20,936Write down of unproven oil and gas properties
        67,000
        
        -Total costs and expenses
        130,808
        
        20,936Net (loss)
        $          
  (130,808)
        
        $            (20,936)Per share
  information:Weighted average number of commonshares outstanding - basic and
  diluted
        7,161,803
        
        1,562,419Net (loss) per common share - basic and
  diluted
        $                (0.02)
        
        $                (0.01)



The accompanying notes are an
integral part of the financial statements.

-28-NATION ENERGY, INC.
    Statement of Changes in Stockholders' Equity
    (Restated)

  Common Stock
        
        Additional
        
        Common
        
        
        
        TotalNumber of
        
        
        
        Paid-in
        
        Stock
        
        Accumulated
        
        Stockholders'Shares
        
        Amount
        
        Capital
        
        Subscriptions
        
        Deficit
        
        EquityBalance, March 31, 1998
        
        
        1,000,000
        
        $   1,000
        
        $           
            -
        
        $          
            -
        
        $      (1,000)
        
        $          -Issuance of common stockfor cash at $0.12 per share
        
        
        6,070,000
        
        6,070
        
        722,330
        
        -
        
        -
        
        728,400Net (loss) for the year
        
        
        -
        
        -
        
        -
        
        -
        
        (20,936)
        
        (20,936)Balance, 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
        
        -
        
        -
        
        20,000Common stock subscribedfor at $1.00 per share
        
        
        -
        
        -
        
        -
        
        3,500,000
        
        -
        
        3,500,000Contribution of services byrelated party
        
        
        -
        
        -
        
        20,000
        
        -
        
        -
        
        20,000Net (loss) for the year
        
        
        -
        
        -
        
        -
        
        -
        
        (130,808)
        
        (130,808)Balance March 31, 2000
        
        
        7,170,000
        
        $   7,170
        
        $    762,230
        
        $3,500,000
        
        $   (152,744)
        
        $ 4,116,656

  

The accompanying notes are an
integral part of the financial statements.

-29-NATION ENERGY, INC.
Statements of Cash Flows 
(Restated)

RestatedFor the
        
        For theYear Ended
        
        Year EndedMarch 31, 2000
        
        March 31, 1999Cash flows from operating activities:Net (loss)
        $           
            (130,808)
        
        $            
            (20,936)Adjustments to reconcile net (loss) to net cash(used in) operating activities:Write down on unproven oil and gas properties
        67,000
        
        -Contribution of services recorded asadditional
            paid-in capital
        20,000
        
        -Common stock issued for services
        20,000(Increase) in prepaid expenses
        (100,632)
        
        -Increase (decrease) in accounts payable
        (11,538)
        
        20,741Net cash (used in) operating activities
        (135,978)
        
        (195)Cash flows from investing activities:Purchase of oil and gas properties
        (197,878)
        
        -Net cash (used in) investing activities
        (197,878)
        
        -Cash flows from financing activities:Proceeds from common stock issued and subscribed
        3,500,000
        
        728,400Net cash provided by financing activities
        3,500,000
        
        728,400Net increase in cash
        3,166,144
        
        728,205Beginning cash
        728,205
        
        -Ending cash
        $          
            3,894,349
        
        $           
            728,205Supplemental cash flow information:Cash paid for interest
        $                     
            -
        
        $                   
            -Cash paid for income taxes
        $                     
            -
        
        $                   
            -



The accompanying notes are an
integral part of the financial statements.

-30-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.

The Company was in the development stage
from its inception through March 31, 1999.  The fiscal year ending March 31, 2000 is the first year during
which it is considered an operating company.

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, 2000.  The respective
carrying value of certain on-balance-sheet financial instruments approximated
their fair values.  These financial instruments
include cash, prepaid expenses 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 receivable or payable on demand.

Income Taxes

The
Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for
recording the provision for income taxes. 
Deferred tax assets and liabilities are computed based upon the difference
between the financial statement and income tax basis of assets and liabilities
using the enacted marginal tax rate applicable when the related asset or
liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes
in the asset or liability each period. If available evidence suggests that it
is more likely than not that some portion or all of the deferred tax assets
will not be realized, a valuation allowance is required to reduce the deferred
tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of
change.

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.-31-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 the periods presented common stock
equivalents were not considered, as their effect would be anti-dilutive.

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.

  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, exploratory dry holes, geological and geophysical costs not
associated with a specific unevaluated property, completion and
costs of well equipment.  Internal costs
are capitalized only if they can be directly identified with acquisition,
exploration, or development activities. 
As of March 31, 2000, the Company has not capitalized any internal
costs.

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.

-32-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, 2000, the Company had not granted any stock
    options.

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. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities" and Statement No 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of
Effective Date of FASB Statement No. 133".  Both Statements defer for one year the effective date of FASB
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities".  The rules 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," which is required to be adopted in
years beginning after June 15, 1999. 
The Statement permits early adoption as of the beginning of any fiscal
quarter after its issuance.  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 yet
determined if it will early-adopt and what the effect of SFAS No. 133 will be
on the earnings and financial position of the Company.

  Note 2.  UNPROVED OIL AND GAS PROPERTIES

The Company currently is involved in one project as of March
31, 2000, 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, 2000:

Acquisition of unproved properties
  $   120,801Exploration costs
  60,077Development costs
  17,000$    197,878-33-The 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 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.  The Company elected to proceed with the
joint venture.

Under
the joint venture agreement, 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. The Company expects to spend $525,000 on drilling and
completing approximately 10 wells to a minimum depth of 1,200 feet.  If the cost of drilling and completing these
wells is less than $525,000, the Company will spend the difference on preparing
the wells for production and connecting the wells to a sales line. After
spending the $525,000, the Company will be deemed to have the right to 50% of
the profits of the Greater Trona Area joint venture.



On June 2, 2000 Saurus commenced
drilling the first of the wells to be drilled under the agreement. As of June
21, 2000 Saurus had drilled the first three wells of the initial ten-well program.
The Company and Saurus will evaluate the results of the initial ten-well
drilling program before making a decision to proceed further with the Trona
project.

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.
Saurus will have this option for a period of six months from the date of the
completion of the last of the ten initial wells discussed above.

The
Board of Directors has concluded that as of March 31, 2000 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, 2000 the Company has written down drilling
costs of $60,000 and geological and geophysical costs of $7,000.

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,
2000, the funds under deposit exceed this insured amount by $3,794,349.

  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.-34-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.

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,
par value $.001 at a price of $1.00 per share. 
As of March 31, 2000, 3,500,000 shares of this offering were subscribed
and paid for by various investors (see Note 7).

For the year ending March 31, 2000, the Company
has received services from a related party with an estimated value of $20,000.
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.  The Company has prepaid drilling expenses of
$90,423 and oil and gas properties, which consist of leasehold costs, totaling
$190,878.

Under the arrangement 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.
The Company expects to spend $525,000 on drilling and completing approximately
10 wells to a minimum depth of 1,200 feet. The first payment of $199,872 was
advanced on April 11, 2000.  If the cost
of drilling and completing these wells is less than $525,000, the Company will
spend the difference on preparing the wells for production and connecting the
wells to a sales line. After spending the $525,000, the Company will be deemed
to have the right to 50% of the profits of the Greater Trona Area joint
venture.-35-Note 6.  INCOME TAXES

The Company has a Federal net operating
loss carryforward of approximately $72,700, which will expire in the year
2020.  The tax benefit of this net
operating loss of approximately $3,600 has been offset by a full allowance for
realization.  This carryforward may be
limited upon the consummation of a business combination under Section 381 of
the Internal Revenue Code.

  Note 7. RELATED PARTY TRANSACTION



The Company has a subscription for
3,000,000 shares of its common stock 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 Company has received services from a
related party with an estimated value of $20,000 for the year ending March 31,
2000.  The Company has recorded the
value of the services received as additional paid-in capital.

  Note 8. CORRECTION OF AN ERROR



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 earnings per share related to
the correction of the error is not considered significant.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

-36-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
  47
  Chairman of the Board of Directors, VicePresident and Chief Financial Officer,SecretaryDonald A. Sharpe
  42
  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

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, and has been a director since March 1993,of Ultra Petroleum Corp., a
public oil and gas production and exploration company, and served as that
company's President from March of 1993 to May of 1996 and as Chief Financial
Officer from May of 1996 to September of 1998. He is currently a director of
Cubix Investments, Inc. (formerly named R.I.S. Resources International Corp.),
a Canadian 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. 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),
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.-37-Donald A. Sharpe, President, Chief Executive Officer, Director
  Mr. Sharpe has been the President, CEO and a director of the Company since
June 4, 1999. As President, CEO and a member of the Board of Directors since
1997of 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 the 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.

Darrell Brookstein resigned from the Board of Directors of the Company on
May 22, 2000.

No reports pursuant to Section 16(a) of the Securities Exchange Act of 1934
have been filed with respect to the Company.

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.

-38-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
  
  2000(1)
  $0
  $0
  0
  0
  0Jeffrey L. Taylor, CEO
  
  2000(1)
  $0
  $0
  0
  0
  0(2)



(1) The results reported in the "Summary Compensation Table" for
the period designated "2000" are for the current fiscal year ending
March 31, 2000. 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.

The Company made no awards to executive officers under long-term incentive
plans in the last completed fiscal year.-39-ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)           Security
ownership of certain beneficial owners

The following table sets forth the beneficial ownership of Company shares of
each beneficial owner of 5% or more of the Company's common stock known to the
Company. The following information is based solely on the representations of
share ownership made by persons representing themselves as owners of the
Company's common stock in connection with the proxies solicited for the January
14, 2000 meeting of the Company's shareholders.

  Name and address of
          beneficial owner
      Amount and nature
          of beneficial owner(1)
      Percent of
          classSinclair Publishing Limited
      670,000
      9.344%Palm ChambersRoad Town, TortolaBritish Virgin IslandsLynx Knights de Finance SA
      670,000
      9.344%3076 Sir Fraces Drake HighwayRoad Town, TortolaBritish Virgin IslandsWestin Machineries Pension SA
      670,000
      9.344%3076 Sir Fraces Drake HighwayRoad Town, TortolaBritish Virgin IslandsLiegeman, SA
      670,000
      9.344%3076 Sir Fraces Drake HighwayRoad Town, TortolaBritish Virgin IslandsCroix Merchants & Barter
      670,000
      9.344%3076 Sir Fraces Drake HighwayRoad Town, TortolaBritish Virgin Islands(1)          
Holder of 5% or more of the common stock of the Company

(b)           Security
ownership of management-40-The following table sets forth the beneficial ownership of Company common
    stock of each executive officer and director, and all directors and executive
    officers as a group.

  

  Name and address of
  beneficial owner(1)
  Amount and nature
  of beneficial owner
  Percent of
  classJohn R. Hislop
  0(2)
  0%Donald A. Sharpe
  0(3)
  0%All directors and executive
  0
  0%officers as a group (5 persons)(1) The address for each of the persons listed is Suite 1100 - 609 West
Hastings Street, Vancouver BC Canada V6B 4W4 
(2) John R. Hislop is the Chairman of the Board of Directors, Vice President
and Chief Financial Officer, and Secretary of the Company 
(3) Donald A. Sharpe is the President, Chief Executive Office, Director of the
Company

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Cubix Investments, Inc. (formerly named R.I.S. Resources International,
Inc.), a British Columbia, Canada, corporation whose Common Stock is traded on
the Canadian Venture Exchange, has submitted a subscription for 3,000,000
shares of Common Stock in the private placement that is currently pending. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS--Private Placement." John R. Hislop, the Company's Chairman of the
Board, Secretary and Vice President and Chief Financial Officer, is the
President and a director of Cubix Investments, Inc.  In addition, the
Company is permitted to utilize office space without charge under an oral
arrangement with Caravel Management Corp., which is wholly-owned by Mr. Hislop.

-41-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 NameReport of Independent Auditors--Stark Tinter & Associates, LLCBalance Sheet of March 31, 2000 and March 31, 1999Statements of Operations for the period March 31, 1999 to March 31, 2000Statement of Changes in Stockholders' Equity for the period March 31, 1999
  to March 31, 2000Statements of Cash Flows for the period March 31, 1999 to March 31, 2000Notes to Financial Statements2.1
  Certificate of Incorporation of Company, filed December 16, 1999*2.2
  Certificate of Amendment of Certificate of Incorporation of Company, filed
  February 15, 2000*2.3
  Bylaws of the Company*6.1
  Joint Operating Agreement with Saurus Resources, Inc. dated December 1,
  1999*6.2
  1999 Stock Option and Incentive Plan*27.1
  Financial Data Schedule* Incorporated by reference from the Company's Form 10-SB filed with the
Securities and Exchange Commission March 31, 2000

No Form 8-K has been filed by the Company during the period covered by this
report.-42-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/ John R.
  Hislop
       John R. Hislop, CFOIn 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)

-43-