SECURITIES EXCHANGE COMMISSION
                    Washington, D.C.  20549

                          FORM 10-KSB

         ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
           For the Fiscal Year Ended December 31, 1997

                Commission file number  0-29670

                    DRUCKER INDUSTRIES, INC.

     (Exact name of registrant as specified in its charter)

          Delaware                                N/A
      (State or other jurisdiction                (I.R.S.Employer
      of incorporation or organization)           Identification No.)

#1-1035 Richards Street, Vancouver, B.C. Canada        V6B 3E4
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:    (604) 681-4421

Securities Registered Pursuant to Section 12(b) of the Act:

                              NONE

Securities Registered Pursuant to Section 12(g) of the Act

                 COMMON STOCK $.0001 PAR VALUE

Indicate  by check mark whether the registrant (1) has 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  the  filing
requirements for at least the past 90 days.

                    Yes  X       No

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

                    Yes        No   X



<PAGE>

Registrants gross revenues for its most recent fiscal  year  were
$135,266, and operations expenses totaled $685,080 for a net loss
of $(549,814) on operations.

State the aggregate market value of the voting stock held by non-
affiliates of the Registrant: $17,054,061 as of December 31, 1997
(a $.75/share bid at December 31, 1997).

Indicate  the  number  of  shares  outstanding  of  each  of  the
Registrant's classes of common stock: 32,476,250 common shares as
of December 31, 1997.




<PAGE>

                       TABLE OF CONTENTS



                             PART I
                                                            Page

Item    1.          Business   ..................................1

Item    2.          Properties   ................................14

Item    3.          Legal   Proceedings..........................16

Item    4.          Submission of Matters to a Vote of
                    Security Holders.............................16

                            PART II

Item    5.        Market for Registrant's Common Stock and
                  Security  Holder Matters.......................16

Item    6.        Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations.....................................18

Item    7.        Financial  Statements and  Supplementary Data..24

Item    8.        Changes in and Disagreements with Accountants
                  on   Accounting  and  Financial Disclosure.....24

                            PART III

Item    9.        Directors and Executive Officers of the
                  Registrant.....................................25

Item    10.       Executive  Compensation........................27

Item    11.       Security Ownership of Certain Beneficial
                  Owners   and   Management......................29

Item    12.       Certain Relationships and Related
                  Transactions...................................30

                            PART IV

Item    13.       Exhibits, Financial Statement Schedule
                  and  Reports  on  Form  8-K....................31





<PAGE>

                             PART I



ITEM 1.   BUSINESS

     (a)  General Description and Development of Business.

                       HISTORY OF COMPANY
                  (Through December 31, 1997)

      On  February 4, 1971, the Registrant was incorporated under
the laws of the State of Idaho, under the name of Monetary Metals
Corporation.

      On  December 16, 1988, Drucker Sound Design Corporation was
incorporated under the laws of the State of California.

      On  October 18, 1989, Gul Industries Corp. was incorporated
under the laws of the State of Delaware.

      On  December  14,  1989,  the Registrant  entered  into  an
Agreement and Plan of Reorganization, whereby the issuer acquired
100% of the assets subject to liabilities of Drucker Sound Design
Corporation,  a  California corporation.   The  Registrant  began
engaging   in  the  manufacturing  and  distribution  of   audio,
cellular, C.B., radar, and other electronic installation  systems
for  automobiles.  The Company decided to redomicile in  Delaware
and entered into a merger agreement with Gul Industries, Inc.,  a
Delaware  corporation.  On April 16, 1990, the  Registrant  filed
Articles  of  Amendment in the State of Idaho changing  its  name
from   Monetary  Metals  Corporation  to  Drucker  Sound   Design
Corporation.    On  June 6, 1990, Gul Industries  Corp.  filed  a
Certificate  of Amendment to the State of Delaware  changing  its
name  to  Drucker Sound Design Corporation.  On June 19, 1990,  a
Certificate  of  Merger was filed in the State of  Delaware.   On
August 7, 1990, a Certificate of Merger was filed in the State of
Idaho.   Prior  to  September 1991, the  Registrant  discontinued
engaging  in  the  business of manufacturing and distributing  of
audio,  cellular, C.B., radar, and other electronic  installation
systems  for  automobiles.  On September 4, 1991, the  Registrant
filed  Certificate of Amendment in the State of Delaware changing
its name to Drucker Industries, Inc.

      In September 1991, the Company purchased the license to the
"N-Viro  Process" in Japan from N-Viro Energy Systems,  Ltd.  for
$466,063.  The Company made a $100,000 down payment and paid  the
balance by quarterly installments.  The Company was delinquent on
minimum  royalty  payments due June 30, 1994  and  September  30,
1994,   totalling  $50,000,  and  consequently  all  rights   and
privileges  granted  to the Company under the  license  agreement
were cancelled by the licensor.  The license agreement costs, net
of  accumulated  amortization, were written-off during  the  year
ended  December  31,  1994.  The Company at  December  31,  1995,
terminated any attempts in the N-Viro business.

                               1

<PAGE>

      No activities were conducted in 1995 or 1996.  In 1997, new
management was engaged and a business plan to engage in  oil  and
gas exploration was adopted.

                      THE COMPANY BUSINESS

1.   General Operations

      The Company has had very limited operations within the last
three  years,  and  such  operations  have  been  restricted   to
investigation  of opportunities, evaluation and  negotiations  of
the  joint venture agreements described hereafter, and the  joint
venture  participations in oil exploration projects in  China  in
fall 1997.

     Current Business

      The  Company was inactive until late 1996.  In early  1997,
the  Company negotiated joint venture farm-in agreements with two
Vancouver  based oil companies for a 50% interest in certain  oil
projects  in  the  People's Republic  of  China.   The  Company's
primary  business  focus  is  the  acquisition,  exploration  and
development  of  mineral  properties  and  oil  and  natural  gas
properties.    The  Registrant has contractual interests  in  the
joint ventures described in (d) below.

      The  Company  anticipates that its  business  will  require
capital  to make required financial investments under  the  joint
venture  agreements.   The Company intends  to  use  the  capital
Markets  of  the United States and Europe to secure  the  capital
funding  required by the Company and its operations.  It  has  no
commitments  for  funding  as of the date  of  this  registration
statement,  nor  anticipated sources of debt or  equity  funding,
except its cash on hand.

      The  Company's  current business plan is  in  oil  and  gas
production,  exploration,  and  joint  ventures  in  China.   The
Company  has determined that it must build an asset base  through
acquisition of assets; by exchange of stock for other  companies,
real  estate,  oil  and gas leases, oil and  gas  properties  for
production  or  workover/if necessary, or gas  pipelines  if  the
opportunity to exchange stock for pipeline interests  as  arises.
The  Company  believes  that debt will  rarely  be  desirable  to
acquire  any  asset or business.  The Company may  acquire  other
assets  by  exchange  of  stock and will consider  the  following
factors in approving such acquisition:

          1.   The affect on the financial statements of the Company.
          2.   The affect on the debt position of the Company.
          3.   The  potential for appreciation on the asset,  or
               the profit potential, if any.
          4.   The market value, if determinable, of the asset.
          5.   The cost of increasing the asset value, or making
               the asset produce income if oil and gas leases or
               interests, are to be acquired; the costs of testing,
               drilling, operations, workover, and the risks of loss
               therefrom, to  attempt  to  achieve  oil  and  gas
               production.  (No formula is set for such determination
               due  to  numerous unknown factors.  It  is  solely  the
               discretionary  decision based on  subjective  judgments
               whether or not to drill, explore or attempt workover).
 
                                  2

<PAGE>

          6.   The  asset  value per share of  the  asset  being
               acquired.  No formula has been set, but the Company
               would follow the  general  consideration that  each
               successive acquisition would contribute asset value or
               revenue to the company.

          The Company intends to pursue acquisitions which appear 
to hold potential for adding equity and/or cash flow to the Company.

      The  Company  has not established, and does not  intend  to
formally  establish, criteria for the selection or evaluation  of
oil  and  gas  properties or participations.  When a property  is
located which the management, in its opinion, believes holds  the
potential for profit for the Company, an attempt will be made  to
secure  an  option,  or  lease,  in  the  property.   Shareholder
approval   will   not   be  sought  for  property   acquisitions.
Therefore,  shareholders will be dependent upon the  judgment  of
management in selecting properties (see "Management").   If  such
an  interest is acquired, the Company will then expend funds  for
preliminary exploration and testing of the property to  determine
the  feasibility of production of such property.   Based  on  the
results  of  such preliminary testing, the Company  will  decide,
without  shareholder approval, whether to acquire or abandon  the
property.   A  property may be acquired by outright purchase;  by
purchasing  or  leasing  the oil, gas or mineral  rights  of  the
property; or by exchange of the shares for leases or interests in
properties.

      The Company may expend funds to rework, explore or test any
oil  and  gas  prospects  it acquires to determine  the  economic
production feasibility of such properties.  The Company will rely
on  outside  consultants (none of whom have been  designated)  to
provide  management with competent evaluation and recommendations
concerning  property or interests in properties to be  considered
for  acquisition.  The Company has no agreement or understanding,
express  or implied, with any outside professional; and there  is
no  assurance  that  it will be able to retain  the  services  of
competent  experts  or  as to the fees which  such  experts  will
charge  the  Company.  Based upon the results of such exploration
and  tests, as interpreted by management, the Company  will  then
determine  whether  such properties should be acquired,  explored
further, sold or leased to a third party, held for possible later
development  or abandoned; or whether development  to  production
should  be  attempted by the Company either by itself or  through
joint venture or other business arrangements with other companies
or entities.

          The Company owns no subsidiaries.

      The Company currently maintains its offices #1-1035 Richards  
Street, Vancouver, B.C. Canada V6B 3E4.  Its  telephone number is 
604-681-4421.

    (b)  Parents and Subsidiaries

          Parent

               DRUCKER INDUSTRIES, INC., a Delaware corporation

                                 3



<PAGE>

          Subsidiaries

               None


     (c)  Oil and Gas Activities.

     Registrants  oil  and  gas  exploration,  development  and
production  activities have been limited due to lack  of  capital
and  lack of focus in such area prior to 1997.   The Company,  in
1997  received stock sale proceeds to finance its oil & gas joint
ventures in China and intends to actively pursue opportunities in
oil and gas in China over the next year.

     The  Company's  proposed principal areas of activities  are
described below.

     Exploration and Production Activity.  The Company's strategy
with  respect  to  its oil exploration related activities  is  to
identify  geological  areas in which the Company  may  invest  or
participate  in non-producing or producing oil and gas  prospects
or joint ventures for development and where the company may lease
prospects for oil and gas exploration.  In 1997, it joined  joint
ventures to explore for oil and gas in China.

     During  the last five (5) fiscal years, the parent  Company
conducted no exploration activities on oil and gas properties  as
a  consultant or otherwise except for joint venture participation
in  China.  If the Company acquires oil and gas prospects in  the
future,  the  Company  may  agree to  assign  rights  in  certain
properties to be drilled to the general or managing partner of  a
partnership or joint venture which thereby becomes the owner of a
working  interest in the property and the Company will retain  an
interest in the property.  The Company actively reviews prospects
for  putting  together exploration or development drilling  joint
ventures, but currently has no proposal being negotiated  on  any
specific  property,  lease  or  asset,  not  otherwise  discussed
herein.

     The  Company does not own any drilling rigs,  nor  does  it
employ drilling or operating crews.  The Company will not be  the
actual  contract  driller  of wells.  If  and  when  the  Company
decides to drill to explore a prospect, the Company will contract
with third-party drilling companies to drill oil and gas wells on
a  fixed-cost  (turnkey)  basis.  Once a  well  has  reached  its
desired  depth, the Company, in consultations with experts,  will
then determine whether to complete such wells and/or to plug  and
abandon  the well.  All well completion activities are  conducted
under  supervision of the Company and its consultants,  by  third
party service contractors.

     The  Company  is  not carrying any reserve  values  of  any
properties due to the lack of any production or found reserves.

                                4



<PAGE>

     Exploration Results      1997                Prior Years

     Gas Wells                0                   0
     Dry Holes                1                   0
     Oil Wells                0                   0

     Financing of Oil and Gas Activities.  The Company's  future
oil  and  gas  financing activities will be  conducted  primarily
pursuant to ventures with Independent companies and through Joint
Ventures in which the Company may act as co-venturer ("Company-Joint
Ventures") or as a working interest participant.  The Company has 
contacted some independent companies who  have indicated an interest 
in participating in financing  if the  project  interests them.  The 
Company hopes to put  together some  participations  in the next year.   
In  1997,  the  Company participated in exploration participation in 
China in which it paid 100% of costs  for  a  50% interest in the 
concession and any production found.  The 1997 results were one dry hole.

     The following table sets forth, for the years indicated, the
funds  invested  by  the  Company  pursuant  to  contracts  under
Participation  Agreements and Joint Ventures.   The  Company  may
record  revenues from operations on the percentage of  completion
method  as  the oil and gas projects are drilled or  constructed,
rather than when funds are received.

                               Year Ended Decmeber 31,

                               1993     1994    1995     1996      1997

Independent Partnerships       0        0       0        0         0

Participation Payments        $0       $0      $0       $50,802   $1,916,763
Under Agreements

             Total            $0       $0      $0       $50,802   $1,916,763

     In  1997, the Company offered and sold 5,179,500  units  at
$1.00 per unit pursuant to an Offering Memorandum.  Each unit  is
to  consist  of  one common share and one share purchase  warrant
which  will  entitle the holder thereof to acquire an  additional
unit  at  $1.50 per unit.  This warrant will expire  in  eighteen
months  from  the  closing  of  the  Offering  Memorandum.    The
additional  unit  is  to  consist of one  common  share  and  one
additional share purchase warrant to acquire one common share  at
$2.00 per share.  This warrant will expire in thirty months  from
the date of closing of the Offering Memorandum, unless extended.

(d)  Narrative Description of Business.

     The primary initial focus of business operations is to make
an investment in oil and gas exploration joint ventures in China.

     See  also  (c)  "Oil and Gas Activities", "Properties"  and
"Joint Ventures" hereafter for more complete discussion).

                               5



<PAGE>

Governmental Regulation for U.S. Operations If Ever Developed

           General  -  The  Registrant's oil and  gas  production
activities  are  subject  to  extensive  regulation  by  numerous
federal,  state  and  local governmental  authorities,  including
state  conservation agencies, the Department of Energy (including
the Economic Regulatory Administration and the Federal Bureau  of
Indian Affairs and Bureau of Land Management). Regulation of  the
Registrant's production, transportation and sale of oil  or  gas,
and  federal price and allocation controls in particular, have  a
significant effect on the Registrant and its operating results.

           Natural  Gas  Price  Controls  -  The  Federal  Energy
Regulatory Commission ("FERC"), an independent commission  within
the  Department of Energy ("DOE"), has pricing authority over the
transmission and sale of various categories of natural gas.  This
authority  includes  administration of the Natural  Gas  Act  and
Natural Gas Policy Act of 1978 ("NGPA"), which establishes, among
other  things,  maximum lawful prices for various categories  and
other price adjustments. These maximum lawful prices apply to the
sale  of  natural gas in both intrastate and interstate  commerce
from  properties  in which the Registrant has an  interest,  NGPA
price  controls as to certain classifications have  been  removed
and  generally  the  sale  of  the Company's  gas  production  is
currently not subject to price regulations.

           State  Regulation - The production operations  of  the
Registrant  are  subject  to  regulation  by  state  conservation
commissions  which have authority to issue permits prior  to  the
commencement of drilling activities, establish allowable rates of
production,  control spacing of wells, prevent waste and  protect
correlative  rights, and aid in the conservation of  natural  oil
and  gas. Typical state regulations require permits to drill  and
produce  oil  or  gas,  protection of fresh water  horizons,  and
confirmation that wells have been properly plugged and abandoned.

           Environmental  Matters  - Various  federal  and  state
authorities  have  authority  to  regulate  the  production   and
development of oil and gas and mineral properties with respect to
environmental  matters. Such laws and regulations,  presently  in
effect or as hereafter promulgated, may significantly affect  the
cost  of the workover and development activities contemplated  by
the  Registrant  and  could result in loss or  liability  to  the
Registrant  in  the  event that its operations  are  subsequently
deemed  inadequate  for purposes of any such law  or  regulation.
New  regulations, if adopted, could result in significant capital
expenditures   by  the  Registrant,  resulting  in   unprofitable
operations.

Uncertainties Related to the Oil and Gas Business in General

           The Registrant's operations will be subject to all  of
the  risks  normally incident to the production of oil  and  gas,
including  blowouts, pollution and fires. Each of these incidents
could result in damage to or destruction of oil and gas wells  or
formations  or  production facilities or  damage  to  persons  or
property.  As  is  common  in  the  oil  and  gas  industry,  the
Registrant  is  not  fully  insured against  these  risks  either
because insurance is not available or because the Registrant  has
elected not to insure due to prohibitive premium costs.

                               6

<PAGE>

           The  Registrant's  future oil and gas  activities  may
involve  a significant risk that commercial oil or gas production
will  not  be  maintained.  The  costs  of  drilling,  completing
reworking  or  operating  wells  is  often  uncertain.   Further,
operations,  may  be curtailed or delayed as  a  result  of  many
factors, weather conditions, delivery delays, shortages  of  pipe
and equipment, and the availability of workover equipment.

           The  oil and gas business is further subject  to  many
other   contingencies  which  are  beyond  the  control  of   the
Registrant. Wells may have to be shut-in because they have become
uneconomical  to  operate due to changes in  the  price  of  oil,
depletion of reserves, or deterioration of equipment. Changes  in
the  price  of  imported oil, the discovery of new  oil  and  gas
fields and the development of alternative energy sources have had
and will continue to have an important effect on the Registrant's
business.

China's Economy

      Since  the  beginning  of Communist  rule  in  1949,  China
underwent  close to 30 years of severe central planning  and  was
mostly  closed  to  the  outside world. Within  that  period  the
country  was  subjected to the "Great Leap Forward" of  the  late
50's  and  the "Cultural Revolution" of the late 60's.  When  the
country   was   returned   to   a   market   economy   by    Deng
Xiaoping("Socialism  with  Chinese  characteristics"  by   Deng's
words), 1 billion Chinese were set free to pursue economic growth
and its rewards. Today,after almost 20 years of economic reforms,
China  has  risen  from  another-developed  economy  with  little
technical or industrial expertise to the third largest economy in
the world - after the United States and Japan.

     Since the beginning of economic reforms in 1978, real growth
has averaged 9.5% a year for 19 years, 560% in total.

 % Change      1993      1994      1995      1996 E
Real GDP       13.5      11.8      10.2      9.7
Inflation      13.2      21.7      14.8      6.0
Exchange Rate  5.8       8.5       8.3       8.3
(Yuan / US$)
Population     1.20      1.21      1.22      1.24
(Est. Billions)

      The  days  of  uncontrolled growth of the  early  90's  has
prompted  the Central Government to bring in austerity  measures,
and  since 1994, the country saw a slower pace of growth but more
importantly, inflation has been controlled. This monetary  policy
has  also helped China to increase its balance of trade and build
foreign  exchange  reserves of over US$ 100 billion,  the  second
highest  in  the  world after Japan. In 1996, foreign  investment
increased by 7% to US$ 40 billion, putting China second  only  to
the U.S. in attracting overseas money. According to Zhao Xizheng,
Vice  Minister of Power, China will need at least US$ 20  billion
in foreign investments by 2000 to meet its energy needs.

                                 7

<PAGE>

     Regions along the coast have been the major beneficiaries of
China's  economic growth to-date, due to the major  advantage  of
closer to the outside world than the interior. The interior, with
its  rich  untapped  natural resources, has now  been  opened  to
foreign investments.

Demand for Oil

     China's demand for petroleum has been growing by over 8% per
annum  since  1990.  By  1996, the country consumed  3.1  million
barrels  of refined products per day. It is projected to grow  at
an  average 5% compound annual growth rate between 1996 and  2005
to reach about 5 MM bpd. China became a net importer of crude oil
in  1993 and has experienced a widening shortfall of imports over
exports.  On  a  per capita basis and with a population  of  1.24
billion,  China consumes slightly less than 1 barrel of  oil  per
capita per annum. Compared to a newly industrialized country such
as  South Korea, which consumes 16.9 barrels per capita,  China's
demand for oil will grow as the economy grows. There is an urgent
need  for  the  oil and gas industry to expand its  reserves  and
production to satisfy this impending growth in demand.

China's Oil & Gas Industry

      There are some little known facts about China's Oil and Gas
      industry, for example:

      China is the 5th largest oil producer in the world  today
      with production of around 3 million barrels per day.
    
      Oil was discovered and used in the Northern Shaanxi  area
      of  China in the 11th century, over 900 years ago.  This  is
      where the Company's prospects are located.

      The  first on-shore oil well was drilled in 1907  in  the
      Northern Shaanxi area.

      China has 94 billion tons (approx. 650 billion barrels) of
      oil  reserves;  according  to a  China  Today  October  1996
      interview  with Mr. Wang Tao, General Manager of  the  China
      National  Petroleum and Natural Gas Corporation.  Two-thirds
      of  the total reserves are on-shore and only 18% of on-shore
      reserves are proven.

      There  are over 20 major producing oil and gas  areas  in
      China, e.g. Songliao Basin, Tarim Basin, Ordos Basin.

      China  has produced in excess of 17.5 billion barrels  of
      oil since 1949.

      1995  production about 1 billion barrels of  oil  and  17
      billion cubic metres of natural gas.

      The  Oil and Gas industry in China was insignificant  until
the  Communist  Party came into power in 1949. The industry  came
under  state control and from a production of 876,000 barrels  in
1949, it grew 114,000% (over 1,000 times) to 1995's production of
1 billion barrels.

                                 8

<PAGE>

      On-shore  oil  and gas exploration and development  efforts
over the past 38 years were concentrated on the eastern seaboard,
resulting in large well-known oilfields such as Daqing,   Shengli
and   Liaohe.   Consequently,  approximately  70%   of   on-shore
recoverable  reserves are presently located on  the  east  coast.
These consist of Daqing Oilfield with 32% which is located in the
Songliao  Basin in north-eastern China. Liaohe Oilfield with  12%
in the same basin and Shengli Oilfield with 27%, which is located
in the North China Basin in central eastern China. After years of
productions,  these  established  oil  fields  have   experienced
declining   output  for  several  years.  This  has  necessitated
explorations  inland towards the west, with the most  significant
new  find  in  the Tarim Basin of Xinjiang. According  to  Xinhua
News, China's eastern oilfields' share of on-shore production  is
forecasted  to  fall below 80% by 2000 with the  annual  rate  of
output declining at about 14%.
The Ordos Basin

      The  Ordos  Basin is a major sedimentary basin  located  in
central northern China. It covers an area of 250,000 km2, China's
first  on-shore oil well, drilled in 1907 in the Northern Shaanxi
area  was in this basin. The basin is shared by the provinces  of
Shaanxi,  Ningxia and Gansu,  and administered by  the  Changqing
Oilfield Administration. It is a Jurassic and Triassic play  with
linked  pearl-shaped  stratigraphic traps ranging  at  depths  of
1,000  to  2,000  metres. The Ordos Basin, at an early  stage  of
exploration,  currently holds 2% of China's on-shore  recoverable
oil reserves. It is estimated that it contains 18 billion barrels
of  possible  reserves. 1995 production  for  the  basin  was  30
million  barrels and are currently producing at a rate of 100,000
barrels  per day. Since 1970, a total of 220 million barrels  has
been  extracted from the ground. According to a China Today issue
of  December  1996, "With China's key economic strategies  moving
westward, Northern Shaanxi will become the country's major energy
base by the 21st century."

Registrant's Venture Interests

      The  Company has farmed into 1,280 km2 (316,000  acres)  of
land  controlled  separately by Richi Petroleum Corp.  and  Milco
Petroleum Inc., in joint ventures.

      Richi  Petroleum  Corp. has formed a joint-venture  company
with  Ningxia  Lantian Materials Company Ltd.,  a  subsidiary  of
China   Petrochemical  Corp.  (Sinopec),  one  of   the   largest
corporations in China. Sinopec is involved in petroleum refining,
petrochemicals,  synthetic  fibers,  rubbers,  resins,   chemical
fertilizers  and  oil  &  natural gas  based  basic  organic  raw
materials.  They  hold a 19.5% interest in  the  concessions.  In
1995,  Sinopec  processed 800 million  barrels  of  oil  and  had
revenues  of US$25 billion. The Richi joint-venture's concessions
are located in both Ningxia and Northern Shaanxi.

      Milco Petroleum Inc.'s joint-venture partner is Zhong  Yuan
Development  Corp.,  an industrial arm of the Shaanxi  Provincial
Government.  Zhong  Yuan  has  been  successfully  exploring  and
producing  oil in Northern Shaanxi for the last three years.  The
Milco   joint-venture's  concessions  are  located  in   Northern
Shaanxi. Zhong Yuan holds a 15% interest in the joint-venture.

                                9

<PAGE>

      The  Richi  and Milco concessions are located  in  a  known
hydrocarbon  bearing basin, and are near existing  producing  oil
fields.  The typical producing wells are between 1,000  to  2,000
metres deep, with low sulphur crude of 30o API gravity.

China Oil Prices

      China's current on-shore oil price is artificially  set  by
the  government and all oil produced must be sold  to  government
refineries. This has resulted in a must larger profitability  for
the  downstream  companies  than the  upstream  companies.  China
national  oil company China National Petroleum Corp.  (CNPC)  has
appealed to the government to loosen its control on the price  of
crude  oil. And on Friday May 23, 1997, Reuter reports "China  on
Friday  said  it expected to deregulate domestic  oil  prices  to
match  international  market prices  within  two  years,  helping
attract  foreign investment to one of the world's fastest growing
economies." This will have a very positive impact on the Company.

Foreign Oil Companies in China

Company                       Location

Shell                         Coastal Yellow Sea Area
                              Jiangsu Province

Exploration Co. of            Bohai Gulf
Louisiana, Apache

BP, Nippon Oil, Itochu,       Tarim Basin, Xinjiang
Mitsubishi, Mitsui

Exxon, Sumitomo, Inpex        Tarim Basin, Xinjiang

AGIP, Elf, Texaco, Japan      Tarim Basin, Xinjiang
Energy, JapEx


Future Plans for China Concessions

      China  has recently opened its doors to foreign involvement
in  the  country's oil and gas sector. Controlled  by  the  China
National   Petroleum  Corporation  ("CNPC"),  China  had   always
employed  a  guarded  stance towards freeing up  concessions  for
foreign  participation.  When the recent Asian  Financial  Crisis
created  havoc  in neighboring countries directly  affecting  the
flow  of  investments into the region, China's Central Government
decided  to instruct CNPC to adopt a more open policy to  attract
foreign  investments.  Based  on this  understanding,  management
plans  to  further  investigate the available  options  in  China
before committing the company's resources.

                                10


<PAGE>

      Products,  Services, Markets, Methods of  Distribution  and
Revenues.   Oil  and  natural  gas are  presently  the  principal
products  sought  to  be  produced by the  company  but  none  is
presently being produced.

      Joint  Ventures  with  Milco  Petroleum,  Inc.  and  Richi
Petroleum Corp.  (See "Material Agreements" Item 3 (i))

     1.    Milco  Joint  Venture.   By  joint  venture  farm-in
agreement dated January 21, 1997, made between the Registrant and
Milco  Petroleum, Inc. (the "Operator"), the Registrant plans  to
spend  approximately  US$2,500,000 for the  surveying,  drilling,
completion, equipment, operating and other costs for the drilling
and operations associated with the exploration and/or development
and/or completion of oil and/or gas wells in or around the  Ordos
Basin  in north central China in Shaanxi/Ningxia area.  The wells
are  to be drilled on Peoples Republic of China Government lands,
estimated production cost, if any producible oil or gas is found,
including  taxes  and  royalties is  about  US$4.50  per  barrel.
Production,  if  any, is expected to be sold at  Rmb  1,000  (PRC
currency)  or  US  $16.60  per barrel.  The  price  is  currently
controlled but is expected to change in the future as China moves
to a market economy.  Spacing units equating to 50 acres for each
oil well have been designated on the 316,000 acre concession.

     2.   The Registrant and Richi Petroleum Corp. ("Richi") have
entered  into a Participation Agreement dated as of  January  21,
1997, (the "Richi Participation Agreement").

      Under  terms  of  the  Richi Participation  Agreement,  the
Registrant  agrees to pay 100% of all of the costs of  operating,
exploring  and  developing  the Richi  Concession  to  Richi,  as
consideration for an undivided 50% interest in all of the profits
generated  from  the  Richi Concession  and  paid  to  the  joint
venture.   The  Registrant  will also participate  in  all  other
future   concessions  acquired  by  Richi   on   the   same   50%
participation terms.

     The Company participated in one dry hole in China in 1997 at
a cost of $147,281.

     The  Company has one part time employee and has  opened  an
office in Beijing, PRC.  If the Company is successful in its plan
the  number of employees would increase in the United States  and
in  the PRC.  The Company is seeking financing for investment  in
business ventures from investors in the United States, Europe and
Asia.  At this time no assurance can be given that such financing
can be obtained or if such joint ventures can be organized.

     Working  Capital Needs.  The working capital needs  of  the
company   consist   primarily   of:   investigation   activities,
acquisition  of  prospect acreage and costs of  participation  in
joint   ventures  in  the  People's  Republic  of  China.   These
requirements may be met by private placement of stock or loans or
sale  of  working  interests.  The Company will need  to  develop
additional working capital for future operations.

                                 11



<PAGE>

     (3)  Dependence on a Single Customer or a Few Customers.

           a)   Revenues - None.  The Company has no customers at this time.
           b)   Client Services revenues - none

           During the five (5) years ending December 31, 1997, no
revenues were generated from client services.

     (4)  Backlog of Orders.  None at this time.

     (5)  Government Contracts.  None.

     (6)  Competitive Conditions. The oil and gas  industry  is
highly  competitive.   The Company faces competition  from  large
numbers  of  oil  and gas companies, public and private  drilling
programs  and  major  oil companies engaged in  the  acquisition,
exploration,  development and production of hydrocarbons  in  all
areas in which it may attempt to operate in the future.  Many  of
the  programs and companies so engaged possess greater  financial
and  personnel  resources  than the Company  and  therefore  have
greater  leverage to use in acquiring prospects, hiring personnel
and  marketing  oil  and  gas.  Accordingly,  a  high  degree  of
competition  in these areas is expected to continue.  The  markets
for   crude   oil  and  natural  gas  production  have  increased
substantially  in  recent  years.   Oil  prices  have  stabilized
generally,  but  the  world  market  for  crude  oil  should   be
considered unstable due to uncertainty in the Mideast.  There  is
considerable uncertainty as to future production levels of  major
oil  producing  countries.  Significant increases  in  production
could create additional downward pressure on the price of oil.  A
precipitous drop in oil & natural gas prices in the future market
occurred in January 1986, but the Company does not expect  to  be
adversely affected further.

      In  the  past surpluses in natural gas supplies  and  other
factors  have combined to have a negative impact on  the  natural
gas  business.   Purchasers  have  canceled  contracts  or  might
propose  to cancel contracts.  Other purchasers have lowered  the
price they will pay for unregulated natural gas, which previously
commanded  premium  prices.   There  is  no  assurance  that  the
Company's  revenues, if any ever develop, will not  be  adversely
affected by these factors.

      The  market in China is controlled by the Government, which
could  impose taxes or restrictions at any time which would  make
operations, if any, unprofitable and infeasible and cause a write
off of capital investment in chinese oil and gas opportunities.

       The China oil exploration situation is highly competitive.
The Company faces competition from large numbers of companies  in
any areas in which it may attempt to operate in the future.  Many
of  the  companies so engaged possess much greater financial  and
personnel  resources than the Company and therefore have  greater
leverage  to  use  in  acquiring  sites,  hiring  personnel   and
marketing.   Accordingly, a high degree of competition  in  these
areas is expected to continue.

                                 12



<PAGE>

     A number of factors, beyond the Registrant's control and the
effect  of  which  cannot  be accurately  predicted,  affect  the
production  and  marketing of oil and gas. These factors  include
crude oil imports, actions of foreign oil producing nations,  the
availability   of  adequate  pipeline  and  other  transportation
facilities, the marketing of competitive fuels and other  matters
affecting the availability of a ready market, such as fluctuating
supply and demand.

     (7)  Registrant Sponsored Research and Development.  None.

     (8)  Compliance  with Environmental Laws and  Regulations.
The  operations  of the Company are subject to local,  provincial
and  national  laws and regulations in the People's  Republic  of
China.  To date, compliance with these regulations by the Company
has  had no material effect on the Company's operations, capital,
earnings,  or  competitive  position,  and  the  cost   of   such
compliance  has  not  been material.  The Company  is  unable  to
assess  or  predict at this time what effect such regulations  or
legislation could have on its activities in the future.

          (a)  Local Regulation -

          The  Company  cannot determine to what  extent  future
operations  and  earnings of the Company may be affected  by  new
legislation, new regulations or changes in existing regulations.

          (b)  National Regulation -None.

          The  Company  cannot determine to what  extent  future
operations  and  earnings of the Company may be affected  by  new
legislation, new regulations or changes in existing regulations.

          The value of the Company's investments in the Milco and
Richi   may  be  adversely  affected  by  significant  political,
economic  and  social uncertainties in the People's  Republic  of
China ("PRC").  Any changes in the policies by the Government  of
the PRC could adversely affect the company in the Milco and Richi
Joint   Ventures  by,  among  other  factors,  changes  in  laws,
regulations or the interpretation thereof, confiscatory taxation,
restrictions  on  currency conversion,  imports  and  sources  of
supplies,   the  expropriation  or  nationalization  of   private
enterprises, or political relationships with other countries.

          (c)   Environmental Matters - None at the date of this
registration statement.

          (d)   Other  Industry Factors - Oil and  gas  drilling
operations  are  subject  to hazards  such  as  fire,  explosion,
blowouts, cratering and oil spills, each of which could result in
substantial  damage  to oil and gas wells, producing  facilities,
other property and the environment or in personal injury.

      (9)   Number of Persons Employed.  As of December 31, 1997,
the  Company had two part time employees, A. Ken Kow, manager  of
Petroleum Operations at a salary of $3,000 Canadian per month and
the President, Gerald William Runolfson at no salary.

                                13



<PAGE>

ITEM 2.   PROPERTIES

     (a)  Real Estate.   None

     (b)  Title to properties.     See item (1) below.

     (c)  Oil and Gas Drilling Activities. None.

     (d)  Oil and Gas Production. None.

     (e)  Oil and Gas Reserves.  None

     (f)  Present  value of Estimated future  Net  Reserves
     From Proved Developed Oil and Gas Reserves.  None.

     (g)  Reserves Reported to Other Agencies. None.

     (h)  Natural Gas Gathering/Processing Facilities. None.

     (i)  Present Activities and Subsequent Events:

     Material Agreements

     (1)  Richi Petroleum Corp. Agreement

     By  a  participation agreement dated January 21, 1997,  the
Company  agreed  to pay 100% of all the costs  of  exploring  and
developing the Ningxia oil and gas concessions in Yanchi  County,
Ningxia  Province  and  WuQi  county, Shaanxi  Province,  Peoples
Republic of China.

     Under the Agreement the Registrant earns a 50% interest  in
the  profits  to  be  received by a joint venture  named  Ningxia
RichiTian  Oil Development Co. Ltd. ("RichiTian") established  by
Richi  Petroleum Corp. (a company owned by Director Ernest Cheung
and  holder  of  4%  of  Registrants common  stock)  and  LanTian
Materials Company (a subsidiary of Ningxia Petroleum Company),  a
corporation  formed  under the laws of the People's  Republic  of
China ("PRC").  The joint venture is governed by the laws of  the
PRC.

     Richi  Petroleum Corp. owns an 80.5% interest in  RichiTian
joint venture, which in turn holds the rights to explore, develop
and  produce  oil  and  gas from certain concessions  located  in
YanChi   County,  Ningxia  Province  and  WuQu  County,   Shaanxi
Province, in the PRC (collectively, the "Richi Concession"):

                               14



<PAGE>

     County         Concession               Sq.Km.         Acres
     YanChi         HongJingZi               70             17,290
     WuQi           WuGuCheng                250            61,750
     WuQi           TieBianCheng             150            37,050
                    Total                    470            116,090

     (2)  Milco Petroleum, Inc. Agreement

     The  Registrant  and Milco Petroleum, Inc.  ("Milco")  have
entered  into a Participation Agreement dated as of  January  21,
1997 (the "Milco Participation Agreement") pursuant to which  the
Registrant earns a 50% interest in the profits to be received  by
a  joint  venture  named Shaanxi ZhongDa Energy Development  Co.,
Ltd.  ("ZhongDa")  established by Milco and ZhongYuan  Enterprise
Company ("ZhongYuan"), a corporation formed under the laws of the
PRC.   The  joint  venture is governed by the laws  of  the  PRC.
Milco  has  represented that it has an 85.0% profit  interest  in
ZhongDa,  which in turn holds the rights to explore, develop  and
produce  oil and gas from certain concessions located in Northern
Shaanxi Province in the PRC, as follows (collectively, the "Milco
Concession"):

     County         Concession               Sq.Km          Acres
     AnSai          QinBanWan                100            24,700
                    HaoJiaPing               20             4,940
     JingBian       QiaGou                   80             19,760
                    PanGou                   60             14,820
     WuQi           ZhouWanZhen              200            49,400
                    ChangGuanMiao            50             12,350
                    WuCangPu                 200            49,400
     DingBian       HanQu                    100            24,700
                    Total                    810            200,700

      Under  terms  of  the  Milco Participation  Agreement,  the
Company  agrees  to  pay 100% of all of the costs  of  operating,
exploring  and  developing  the Milco  Concession  to  Milco,  as
consideration for an undivided 50% interest in all of the profits
generated  from  the  Milco Concession  and  paid  to  the  joint
venture.   The Company will also participate in all other  future
concessions  acquired  by  Milco on the  same  50%  participation
terms.

      (3)   By a participation agreement dated September 9, 1997,
the  Company agreed to pay 100% of all the costs of exploring and
developing  the  Fuxian oil and gas property  in  Fuxian  County,
Shaanxi Province, Peoples Republic of China as consideration  for
an  undivided  50% interest in all of the profits generated  from
the properties.

      (j)  Criteria:
  
      The  Company  will  consider the  following  criteria  when
evaluating  whether to participate in an oil and gas prospect  in
China:

                                15

<PAGE>

               1)   Geological and Seismic (when available) Data
               2)   Market demand for products;
               3)   Efficient transportation availability;
               4)   Location;
               5)   Weather;
               6)   Management;
               7)   Cost of participation;
               8)   Terms;
               9)   Risk vs. rewards;
               10)  Feasibility study;
               11)  Whether capital is available to fund participation.

ITEM 3.        LEGAL PROCEEDINGS

               None at date of Registration Statement.

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

               None in Fiscal Year ended December 31, 1997.


                            PART II

ITEM 5.        MARKET  FOR  THE REGISTRANT'S COMMON STOCK AND  RELATED
               SECURITY HOLDER MATTERS


      The  Company's common stock is not now traded on the "Over-
the-Counter"  market,  but when traded  will  be  quoted  in  the
National Quotation Bureau or the NASD Electronic Bulletin  Board.
The  following  table sets forth high and low bid prices  of  the
Company's common stock for the three (3) years ended December 31,
1997, 1996, and 1995 as follows:

                                        Bid
                                   High      Low
1997
     First Quarter                 2 1/8     1 1/8
     Second Quarter                1 13/16   1
     Third Quarter                 1.09      .65
     Fourth Quarter                .84       .31

                                 16

<PAGE>

                                        Bid
                                   High      Low
1996
     First Quarter                 1/4       1/8
     Second Quarter                15/32     1/8
     Third Quarter                 5/16      9/32
     Fourth Quarter                2 1/16    1/8

                                        Bid
                                   High      Low
1995
     First Quarter                 1/2       1/4
     Second Quarter                Not Traded
     Third Quarter                 1/4       3/16
     Fourth Quarter                1/3       1/16

     Such over the counter market quotations reflect interdealer
prices,  without retail mark up, mark down or commission and  may
not necessarily represent actual transactions.

     (b)  As  of  December  31,  1997,  the  Company  had   163
shareholders of record of the common stock.

     (c) No dividends on outstanding common stock have been paid
within  the  last  two  fiscal years, and interim  periods.   The
Company  does not anticipate or intend upon paying dividends  for
the foreseeable future.










                 SPACE INTENTIONALLY LEFT BLANK


                                 17



<PAGE>
[CAPTION]
<TABLE>

ITEM 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF   FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

       The  information  presented  herein,  should  be  read  in
conjunction with the Company's consolidated financial  statements
and related notes appearing elsewhere herein.

Selected Financial Information

                                 (A DEVELOPMENT STAGE COMPANY)
                                 Fiscal Year Ended December 31,
                      1997       1996       1995        1994        1993
                        
<S>                   <C>         <C>         <C>         <C>         <C>


Income Statement Data:

Revenues              0           0           0           0           0
Cost of
 Revenues             0           0           0           0           0

Gross Profit          0           0           0           0           0

General and
Administrative
Expenses              247,566     3,118       46,004      89,541      34,865         

Income <loss>
from
operations            (685,080)   0           0           0           0

Other income
 <expense>            135,266     0           (33,451)    (64,769)    (99,081)

Amortization of
License Agreement     0           0           0           (409,236)   (27,415)
(write off - 1994)
Income <loss>
before income
taxes                 (549,814)   (3,118)     (79,455)    (563,546)   (161,361)

Provisions for
income taxes          0           0           0           0           0

Net income
<loss> per   Greater
common share than     (.02)       (.00)       (.004)      (.028)      (.01)

Average shares
outstanding           30,167,056  26,554,183  21,575,697  20,477,500  20,377,500
 
</TABLE>
                                  18



<PAGE>
[CAPTION]
<TABLE>
                    FY          FY           FY
                    1997         1996         1995         1994        1993            

<S>                 <C>          <C>          <C>          <C>         <C>

Balance Sheet Data:

Current  Assets     3,489,285    0            0            1,344       39,340

Total               4,764,502    50,802       0            1,344      448,576
Assets

Current             137,341      53,327       37,407       562,012     472,698
Liabilities

Long-term debt,
net of current
portion             0            0            0            0           0

Deficit Accum-
ulated during
Development
Stage               (1,711,757)  (1,161,943)  (1,158,825)  (1,079,370) (515,824)

Stockholders'
 equity             4,627,16 1   (2,525)      (37,407)     (560,668)   (24,122)
 (deficiency)

MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The  Company  has no primary income source  at  this  time.
Capital  from private placements or borrowing against assets  are
required  to  fund  future operations.  The company  completed  a
private  offering of Units at $1.00 per share for $5,179,500,  in
May 1997.

      The  Company  had no revenues for the twelve  month  period
ending  December  31,  1997.   The  Company  recommenced  limited
business operations in late 1996, and incurred a significant  net
loss   from   operations  in  1997  resulting   from   costs   of
participation  in its joint oil exploration ventures  in  Peoples
Republic  of  China.   The Company may continue  to  show  losses
resulting  from joint venture participation for an  indeterminate
time.

RESULTS OF OPERATIONS

      During  its operations ended December 31, 1996, the Company
incurred  expenses  in  irregular  amounts  through  year   ended
December  31, 1996.  By "irregular", the Company is referring  to
the fact that due to suspended operations, fixed expenses such as
rent,  general  and administrative, accounting,  telephone,  etc.
have  been  variable, and sporadic. The Company has generated  no
business  revenue from operations in 1996, or in  the  first  two
quarters of 1997.

                                 19




<PAGE>

      In  1997,  the  Company  commenced regular  operations  and
incurred significantly greater expenses.

      The  Company incurred the following expenses  in  the  past
fiscal year.


                         December 31, 1997     December 31, 1996
OPERATING EXPENSES                                              

Accounting                          $9,539                $2,745

Consulting                          32,185                     -

Foreign exchange                     (778)               (3,138)     
(gain) loss

Interest and bank                      406                     -
charges

Investor relations                  45,280                     -

Legal                               59,795                   373  

Office and general                  29,776                     -

Printing                            10,059                     -

Promotion                            1,409                     -

Rent                                 7,376                     -

Telephone                            6,741                     -

Travel                              45,778                     -

Write-off of                             -                 3,138     
advances
                                  ______________________________
TOTAL OPERATING                   $247,566                $3,118
COSTS                             ==============================


      It   is  expected  that  expenses  will  continue   at   a
significantly  increased  rate  due  to  costs  of  seeking   and
investigating   China   oil   opportunities   and    implementing
exploration pursuant to joint ventures.

      Cash Flows:

      The  Company  has achieved no revenues from any  operations
during the year, ending December 31, 1997.

      The  income  from  operations for prior years  compares  as
follows:  Fiscal years 1994 and 1995 ($0) and ($0) to Fiscal year
ended  December 31, 1996.  In 1997 the Company also had no income

                                 20



<PAGE>

from operations but had interest income of $135,266.  The Company
has never had any income, revenue or profits.

      At  this  time,  the  Company is dependent  upon  its  cash
reserves, private placements, or loans for future operations  and
funding.   If  its  cash reserves are depleted it  will  have  to
either   borrow  money,  if  possible,  or  raise  funds  through
subsequent  public  or private offerings to  continue  operations
until  when, or if, it ever develops sufficient revenue from  its
assets  to  maintain operations.  If revenues are not  generated,
the  Company will be forced to develop another line of  business,
or  to finance its operations through borrowed funds, the sale of
assets  it  has,  or enter into the sale of stock for  additional
capital  none of which may be feasible when needed.  The  Company
has no specific management ability, and no financial resources or
plans  to  enter any other business as of this date although  the
Company will be open to suggestion and opportunity.

CHANGES IN FINANCIAL CONDITION

       At  year  end  1997  the  Company's  assets  increased  to
$4,764,502 compared to $50,802 at end of 1996.  The increase  was
a  result  of  advances for expenditures for the exploration  and
development  of  the  China joint ventures by  Richco  Investors,
Inc., its largest shareholder.

       The   liabilities,  nearly  all  of  which   are   current
liabilities, also increased significantly as a result of accounts
payable related to expenses for the oil exploration joint venture
in  China.   At year end 1997, current liabilities were $137,341,
an  increase  of  257%  over the 1996  year  end  liabilities  of
$53,327.

      Stockholders'  equity at year end 1997 was  $4,627,161,  an
increase  over  the 1996 stockholder's deficit of ($2,525).   The
Company  achieved this increase through the private  offering  of
Units resulting in net proceeds of $5,179,500 to recapitalize the
Company.

      From  the aspect of whether the Company can continue toward
its  business  goal  of exploring its China  oil  prospects,  the
Company  may use all of its available capital without  generating
revenues.    Without  revenues  and  without  continued   capital
infusions or loans or a combination thereof, it is doubtful  that
the  Company can carry out its business goals regarding the China
joint  venture operations on the oil prospects for  any  extended
period beyond 1998.

Comparison  of  Results of Operation for the Fiscal  Years  Ended
December 31, 1997 and 1996

      The Corporation had no operating revenues in either 1996 or
1997.

      The  Company incurred operating expenses, all of which  are
general and administrative in nature, totaling $3,118 in 1996  as
compared  to  $247,566  in  1997 in  general  and  administrative
expenses and $433,795 in joint venture expenses.  As a result  of
having no operating income, the Company incurred operating losses
of  $(3,118)  in  1996  and  $(685,080)  in  1997.   The  Company
anticipates that the trend of net losses will continue in 1998 as

                                 21



<PAGE>

it  continues to incur major expenses in attempting to  start  up
its China oil joint ventures.

      General  and  Administrative costs  increased  in  1997  to
$247,566 from a total of $3,118 in 1996.   Expenses of a  General
and Administrative nature increased substantially as a result  of
registering  its common stock under the Securities  and  Exchange
Act  of  1934,  increased  audit costs and  expenses  related  to
private placements to fund the China oil exploration and related
administrative costs.

                  Exploration Costs in China
Oil & Gas    Ningxia    Shaanxi     Fuxian            1997             1996 
Project                 
Costs

Project     $953,786   $403,008         $-       $1,225,537         $50,802
Costs

Advance                          (131,257)
due from
project

Dry Hole                                            147,281
Expense

Capital      38,292      2,270        9,118          49,680               -
Assets

Exploration                                         286,514
Expenses   

           $992,078   $405,278   $(122,139)      $                  $50,802

      The  Company  expects that its expenses for  Joint  Venture
participation in China will continue at about the same rate as in
1997 for 1998.

     The per-share loss amounted to $(.02) in 1997 as compared to
$.000 in 1996.

      The  Company incurred no interest expenses in 1997  and  no
interest expense in 1996.  The Company earned interest of $135,266 on
deposits after its Unit offering in 1997.

Comparison  of  Results  of Operations  for  Fiscal  Years  Ended
December 31, 1995 and 1994.

      During  the  fiscal  year  ended  December  31,  1994,  the
Registrant  realized  a  net  loss on  operations  of  $(563,546)
($.028/share) compared to $(79,455) ($.004/share) for the  fiscal
year  ended December 31, 1995.  The large loss in 1994 was  as  a
result of a $409,236 write off of the N-Viro licenses and $25,000
in royalties.

      Operating expenses decreased during 1995 to $79,455 compared
to  1994 at $154,310 except license write off as a result of  the
decrease in royalty and fiscal agent.
                               
Comparison  of  Results of Operation for the Fiscal  Years  Ended
December 31, 1996 and 1995

      The Corporation had no operating revenues in either 1996 or
1995.

      The  Company incurred operating expenses, all of which  are

                                   22

<PAGE>

general and administrative in nature, totaling $3,118 in 1996  as
compared  to $79,455 in 1995.  As a result of having no operating
income, the Company incurred operating losses of $(3,118) in 1996
and  $(79,455) in 1995.   

     General and Administrative costs decreased in 1996 to $3,118
from  a  total  of $46,004 in 1995.   Expenses of a  General  and
Administrative nature will increase substantially as a result  of
registering  its common stock under the Securities  and  Exchange
Act  of  1934,  increased  audit costs and  expenses  related  to
private  placements  to  fund the China oil  joint  ventures  and
miscellaneous operations costs.

     Travel expenses in 1996 were about the same as 1995.  Office
expenses,  including telephone, were $0 in 1996 and $0  in  1995.
These  expenses  were contributed by President Gerald  Runolfson.
1996  expense for accounting totaled $0, while in 1995 accounting
and  other  professional expenses were $0.   The  per-share  loss
amounted to $0.00 in 1996 as compared to $.004 in 1995.

LIQUIDITY

     The  Company  expects  that its  need  for  liquidity  will
increase for the coming year due to its anticipation of expending
funds to form joint ventures in the Peoples Republic of China  or
make acquisitions of interests in businesses.

     Short Term.

     On  a  short term basis, the Company does not generate  any
revenue  to  cover  operations. Based on  prior  experience,  the
Company believes it will continue to have insufficient revenue to
satisfy  current and recurring liabilities as it seeks to  locate
business opportunities.  For short term needs the Company will be
dependent on receipt, if any, of private placement proceeds.

    The Company had current assets of $3,489,285 at December 31,
1997,  and  had current liabilities of $137,341.  Of the  current
total  liabilities, $50,802 was owed to a shareholder group,  who
have  agreed to convert the short term liabilities to a one  year
loan and $55,358 was owed to a company with a common director.

    Long Term.

    On a long-term basis, the Company has no fixed assets.   It
does however have at year end $3,238,576 in fungible cash.

      The  Company  has no business at this time  from  which  it
generates  income. Its operations have no net cash flow  at  this
time.  It is reliant upon success in its China joint ventures, at
this time, for possibility of future income.

                              23



<PAGE>

CAPITAL RESOURCES

      The  primary capital resources of the Company are its stock
and  cash on deposit only.  Stock may be illiquid because  it  is
restricted in an unproved company with no income.

      The Company completed a private placement of 5,179,500 Units
consisting  of common shares and warrants @ $1.00  per  unit  for
operating capital.  The Offering ceased as of May 31, 1997.

      The  Company  intends  to continue to  attempt  to  acquire
business  assets  through the use of its stock, in  exchange  for
assets, under the circumstances discussed in Item 1 (Business).

      As  of  the  date of this report, the Company has  material
commitments  for  capital  expenditures  within  the  next  year,
pursuant  to  the Richco and Milco joint ventures, which  amounts
may exceed its available capital of $3,000,000.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The  response to this Item is included as  a  separate
Exhibit to this report.  Please see pages F-1 through F-11.

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

          a)   None

          b)   In  connection with audits of  two  most  recent
fiscal  years  and any interim period preceding  resignation,  no
disagreements exist with any former accountant on any  matter  of
accounting  principles or procedure, which disagreements  if  not
resolved to the satisfaction of the former accountant would  have
caused him to make reference in connection with his report to the
subject matter of the disagreement(s).

         c)   The principal accountant's report on the financial
statements  for  any of the past two years contained  no  adverse
opinion  or  a  disclaimer of opinion nor  was  qualified  as  to
uncertainty, audit scope, or accounting principles except for the
"going concern" qualification.

         d)   The decision to change accountants was approved by
the Board of Directors as the registrant has no audit committee.

                               24



<PAGE>

                            PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     (a)    The   following  table  furnishes  the  information
concerning the directors of the Company as of December 31,  1997.
The  directors  of the Company are elected every year  and  serve
until their successors are elected and qualify.

Name                           Age            Title               Term

Gerald William Runolfson       57        President and Director   Annual

Ernest Cheung                  48        Secretary and Director   Annual

Patrick Pak Ling Chan          44        Director and  Chairman   Annual

Joseph S. Tong                 48        Director                 Annual

      The  term of office for each director is one (1)  year,  or
until  his/her  successor  is elected  at  the  Company's  annual
meeting  and qualified.  The term of office for each  officer  of
the Company is at the pleasure of the board of directors.

      The board of directors has no nominating, auditing committee
but   has  set  up  a  compensation  committee.   Therefore,  the
selection  of  person or election to the board of  directors  was
neither independently made nor negotiated at arm's length.

      The  term of office for each director is one (1)  year,  or
until  his/her  successor  is elected  at  the  Company's  annual
meeting  and qualified.  The term of office for each  officer  of
the Company is at the pleasure of the board of directors.

      (c)  Identification of Certain Significant Employees.
 
      There  are  no employees other than the executive  officers
disclosed  above  who make, or are expected to make,  significant
contributions  to the business of the Company, the disclosure  of
which would be material.

      (d)  Family Relationships. None.

      (e)  Business Experience.

      The following is a brief account of the business experience
during the past five years of each director and executive officer
of  the  Company, including principal occupations and  employment
during  that  period and the name and principal business  of  any
corporation  or  other organization in which such occupation  and
employment were carried on.

                                25

<PAGE>

                     MANAGEMENT EXPERIENCE

      Gerald  William Runolfson, President and Director, age  57,
has  been  President and Director of the Company since 1991.   He
received a Bachelor of Science in Civil Engineering in 1963  from
University   of   Saskatchewan  Canada.   He   studied   Business
Administration  1970  - 1971 at University  of  Alberta,  Canada.
From  1988 to date, he has been President of International  Butec
Industries  Corp.,  Vancouver, B.C.  From 1991  to  1994  he  was
President of N-Viro Recovery, Inc.  From 1994 to present  he  has
been  President of Elkon Products, Inc. of Vancouver,  B.C.    He
has been a Director of Horseshoe Gold Mines since 1991.

      Ernest Cheung, Secretary and Director, age 48, received  an
MBA  in  Finance  and  Marketing  from  Queen's  University,   in
Kingston,  Ontario  in 1975, and obtained a Bachelors  Degree  in
Math in 1973 from University of Waterloo, Ontario.  From 1984  to
1991   he   was  vice  President  and  Director,  Capital   Group
Securities,  Ltd. in Toronto, Canada.  From 1991 to 1993  he  was
Vice  President  of  Midland  Walwyn Capital,  Inc.  of  Toronto,
Canada.   From  1993 to 1994 he was Vice Chairman,  Tele  Pacific
International Communications Corp. of Vancouver, B.C.  From  1992
-  1995 he has served as a Director of Tele Pacific International
Communications Corp. (VSE).  He has also served as a Director for
Richco  Investors, Inc. (CDN) since 1995.  From 1994 to  1996  he
was  Vice  President of Finance and Director of  BIT  Integration
Technology, Inc. of Toronto, Canada.  Since 1996 he  has  been  a
Director of BIT Integration Technology, Inc. (ASE) and since 1997
he  has  served  as  Director of the following  companies:   Agro
International  Holdings, Inc. (VSE); Spur Ventures,  Inc.  (VSE);
Placer  Technologies, Inc. (Nasdaq Bulletin Board);  and  Global-
Pacific  Minerals, Inc. (VSE).  From January 1997 to  present  he
has  been President of Richco Investors, Inc. of Vancouver,  B.C.
He  has been a Director of Registrant since January 1997.  He  is
currently  a Director of Agro International Holdings, Inc.  since
January   1997,  Spur  Ventures,  Inc.  since  1997  and   Placer
Technologies, Inc. since 1997.  He has held a Canadian Securities
license, but which is currently inactive.

      Patrick  Pak  Ling  Chan, age 44, has been  a  Director  of
Registrant since January 1997 and is now Chairman.  He  graduated
from  McGill  University in Montreal, Quebec with a  Bachelor  of
Commerce in Accounting in 1977.  He is a Chartered Accountant  in
British  Columbia  (since  1980).   From  1992  to  1993  he  was
executive  assistance to the Chairman, Solid Pacific Enterprises,
a   company   engaged  in  manufacturing  and   distribution   of
confectionery products in Hong Kong and China.  From 1985 to 1992
he  was  employed  at  Coopers & Lybrand,  Toronto,  Canada,  and
focused on mergers and acquisitions.  From 1993 to 1995 he was  a
registered Securities Representative with Bache Securities.

      Joseph  S.  Tong, age 48, has been a director of Registrant
since January 1997.  Mr. Tong matriculated from La Salle College,
Kowloon,  Hong Kong in 1968.  From 1986 to 1990 he was  a  Branch
Manager  for  Canadian Imperial Bank of Commerce.  From  1990  to
1994  he  was Regional Manager, Asian Banking, Canadian  Imperial
Bank  of  Commerce.  From 1994 to 1995 he was President of  China
Growth Enterprises Corporation.  From 1995 to present he has been
a  Director,  Corporate Finance, of Corporate  Capital  Group  in
Ontario,   Canada.    He  is  currently  a   director   of   Agro

                              26

<PAGE>

International  Holdings, Inc. of Vancouver,  B.C.  since  January
1997  and Global Pacific Minerals, Inc. of Vancouver, B.C.  since
January 1997.

Directors Compensation

      Each  member  of  the  Board of Directors  of  the  Company
receives  $1,000.00 plus reasonable outside travel  expenses  for
each  Board meeting he attends and for each Committee meeting  he
attends  during the fiscal year.  Directors who are also officers
of  the  Company  receive  no  compensation  for  services  as  a
director.

ITEM 10.  EXECUTIVE COMPENSATION

     (a)  Cash Compensation.

     Compensation paid by the Company for all services  provided
during  the fiscal year ended December 31, 1997, (1) to  each  of
the  Company's  five  most highly compensated executive  officers
whose  cash compensation exceeded $60,000 and (2) to all officers
as a group is set forth below under directors.
            SUMMARY COMPENSATION TABLE OF EXECUTIVES
                   Annual Compensation                   Awards
Name and     Year   Salary   Bonus  Other Annual   Restricted   Securities
Principal           ($)      ($)    Compensation   Stock        Underlying
Position                            ($)            Award(s)($)  Options/SARs (#)
                                                          
Gerald       1997   0        0      0              0            0
Runolfson,   1996   0        0      0              0            0
President    1995   0        0      0              0            0
and Director                                                             

Ernest       1997   0        0      0              0            0
Cheung,      1996   0        0      0              0            0
Secretary    1995   0        0      0              0            0
and Director                                                             

Patrick      1997   0        0      0              0            0
Chan,        1996   0        0      0              0            0
Director     1995   0        0      0              0            0
                                                             
Joseph       1997   0        0      0              0            0
Tong,        1996   0        0      0              0            0
Director     1995   0        0      0              0            0

                                 27

<PAGE>

     (b)  Compensation Pursuant to Plans.  None.

     (c   Other  Compensation.  None.   No  stock  appreciation
rights or warrants exist to management

     (d)  Compensation of Directors.

     Compensation paid by the Company for all services  provided
during  the fiscal year ended December 31, 1996, (1) to  each  of
the  Company's directors whose cash compensation exceeded $60,000
and (2) to all directors as a group is set forth below:

           DIRECTOR COMPENSATION FOR LAST FISCAL YEAR

(Except for compensation of Officers who are also Directors which
Compensation   is  listed  in  Summary  Compensation   Table   of
Executives)

              Cash Compensation             Security Grants
Name              Annual      Meeting   Consulting   Number    Number of
                  Retainer    Fees      Fees/Other   of        Securities
                  Fees ($)    ($)       Fees ($)     Shares    Underlying
                                                     (#)       Options/SARs(#)
A. Director       0          0         0             0         0
Gerald Runolfson

B. Director       0          0         0             0         0
Ernest Cheung

C. Director       0          0         0             0         0
Patrick Chan

D. Director       0          0         0             0         0
Joseph Tong

      (e)   Termination  of  Employment  and  Change  of  Control
Arrangements.
          None

      (f)   KEY EMPLOYEES INCENTIVE STOCK OPTION PLAN:  NONE

      Section  16(a) of the Securities Exchange Act of  1934,  as
amended (the "Exchange Act"), requires the Company's officers and
directors,  and  persons who own more than 10%  of  a  registered
class  of  the  Company's equity securities, to file  reports  of
ownership  and changes in ownership of equity securities  of  the
Company  with the Securities and Exchange Commission and  NASDAQ.
Officers,   directors  and  greater-than  10%  shareholders   are
required by the Securities and Exchange Commission regulation  to
furnish  the Company with copies of all Section 16(a)  that  they
file.  No officers, directors or 10% shareholders have filed  any
Reports pursuant to Section 16(a) at year end.

                                28

<PAGE>

ITEM 11.  SECURITY  OWNERSHIP  OF CERTAIN BENEFICIAL  OWNERS  AND
          MANAGEMENT

     (a)   Beneficial owners of five percent (5) or greater,  of
the  Registrant's Common Stock and Warrants:  No Preferred  Stock
is  outstanding at the date of this offering.  The following sets
forth  information with respect to ownership by holders  of  more
than five percent (5%) of the Company's Common Stock known by the
Company based upon 32,476,250 shares outstanding at December  31,
1997.

Title          Name and                        Amount and             Percent
 of            Address of                      Nature of              of
Class          Beneficial Owner                Beneficial Interest    Class
Common Stock   Richco Investors, Inc.          9,225,000(1)(2)        28.4%
               789 West Pender St. #830
               Vancouver, B.C. Canada V6C 1H2

      b)    The following sets forth information with respect  to
the Company's Common Stock beneficially owned by each Officer and
Director, and by all Directors and Officers as a group.

   Title       Name of                         Amount and             Percent
   of          Beneficial                      Nature of              of
   Class       Owner                           Beneficial Ownership   Class
   Common      Gerald Runolfson                512,501 (a)(b)         1.5%
               President and Director
               4151 Rose Crescent
               West Vancouver, B.C. Canada
(a) Porta-Pave Industries, Inc. (company owned by Runolfson family)   380,002
(b) Gerald Runolfson, individually                                    132,499
                                                                      512,501
    
   Title       Name of                         Amount and             Percent
   of          Beneficial                      Nature of              of
   Class       Owner                           Beneficial             Class
                                               Ownership
   Common      Ernest Cheung                   9,225,000(1)(2)        28.4%
               Secretary and Director
               904 - 183 Keefer Place
               Vancouver, B.C. Canada
               V6B 6B9

                                 29



<PAGE>

   Common      Patrick Chan                     0                      0%
               Director and Chairman
               #7 Conduit Road, Flat 6E
               Hong Kong

   Common      Joseph Tong, Director            0                      0%
               33 Allview Crescent
               North York, Ont., Canada
               M2J 2R4

   Officers and Directors as a Group            9,737,501              29.98%

   (1) 9,225,000 shares are owned by Richco Investors, Inc. of
which Ernest Cheung is a director, officer and shareholder.

   (2)  Richco Investors, Inc. is beneficially owned by  Raoul
Tsakok through ownership of 50%+ shares of common stock.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Certain Transactions

   Richco  Investors,  Inc. is the parent of  Richi  Petroleum
Corp.   and  is  deemed  beneficially  owned  by  Ernest  Cheung,
Secretary  and a Director.  Raoul Tsakok of Vancouver, B.C.  owns
more than 50% of the outstanding equity of Richco Investors, Inc.
Richi  Petroleum Corp. and Milco Petroleum, Inc. are wholly owned
subsidiaries  of  Richco Investors, Inc.  Richco Investors,  Inc.
owns  9,225,000 shares of common stock of the company  (28.4%  of
the outstanding stock of Registrant).  The Registrant has entered
into  joint  ventures in China with Richi and Milco (see  Page  7
"Joint  Ventures  with Milco Petroleum, Inc. and Richi  Petroleum
Corp.), in which Registrant pays 100% of the cost of drilling for
a  50%  interest in the wells.  Registrant paid $147,281  in  dry
hole costs in 1997 for the participation and has invested a total
of  $1,275,217  for  its participation.  The Registrant  is  owed
$131,257 by Richi Petroleum for advances to the Fuxian concession
project.

   During the year ended December 31, 1995, a director of  the
Company charged consulting fees of $36,000.

      Advances receivable of $250,709 (1996:$Nil) are due from  a

                                 30



<PAGE>

company  with  a common director and are unsecured,  non-interest
bearing and have no specific terms for repayment.

   Accounts  payable  and  accrued  expenses  include  $55,338
(1996:$Nil)  payable to a company with a common director,  Richco
Investors, Inc.

   Oil  and gas project costs - advances to (due from) project
are advanced to companies with a common director.  These advances
are  unsecured,  non-interest bearing and have no specific  terms
for repayment.

   Oil  and  gas  project  costs - Capital  assets  have  been
incurred with companies with a common director.

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS  ON
          FORM 8-K

          (a)  Financial Statements and Schedules. The following
financial statements and schedules for Drucker Industries,  Inc.,
as  of  December  31, 1997, and 1996 are filed as  part  of  this
report.

                                                                   Page
     (1)  Financial statements of Drucker Industries, Inc:

          Reports of Independent Accountants
          Report of Amisano & Hanson
          years ended December 31, 1997 and December 31, 1996      F-1
          Balance Sheets                                           F-2
          Statements of Operations                                 F-3
          Statements of Shareholders' Equity                       F-4 - F-6
          Statements of Cash Flow                                  F-7 
          Schedule of General and Administrative expenses          Schedule #1
          Schedule of Dry Hole expenses                            Schedule #2
          Schedule of Exploration expenses                         Schedule #3
          Notes to Financial Statements                            F-8 - F-11

     (2)  Financial Statement Schedules:

          (a)  None
          (b)  Reports on Form 8-K:
          (c)  Exhibits
Item No.
(under 601)
4.1*      Articles of Incorporation and By-Laws:
          Incorporated by Reference as filed with  Form  10
          with the Securities and Exchange Commission
13.1*     Quarterly Report of Drucker Industries, Inc.  10-
          QSB for Period ended September 30, 1997.
22.1*     Subsidiaries of Registrant
* Previously filed

                                 31



<PAGE>

                           SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.

                                       DRUCKER INDUSTRIES, INC.

Date: May 14, 1998                      by:/s/Gerald Runolfson
                                              Gerald Runolfson, President

      Pursuant to the requirements of Section 13 or 15(d) of  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.


/s/Gerald Runolfson           President      May 14, 1998
   Gerald Runolfson           and Director


/s/Ernest Cheung              Secretary      May 14, 1998
   Ernest Cheung              and Director


/s/Patrick Pak Ling Chan      Director       May 14, 1998
   Patrick Pak Ling Chan


/s/Joseph S. Tong             Director       May 14, 1998
   Joseph S. Tong

                                32

<PAGE>
                          DRUCKER INDUSTRIES, INC.
                       (A Development Stage Company)

                            FINANCIAL STATEMENTS

                         December 31, 1997 and 1996

                          (Stated in U.S. dollars)


<PAGE>
                                                        AMISANO HANSON
                                                      CHARTERED ACCOUNTS                                           

                              AUDITORS' REPORT

To the Stockholders,
Drucker Industries, Inc.


We have audited the balance sheets of Drucker
Industries, Inc. as at December 31, 1997 and 1996 and
the statements of operations, stockholders' equity
and cash flows for each of the years in the three
year period ended December 31, 1997 and for the
period from inception of the development stage,
January 1, 1997 to December 31, 1997.  These
financial statements are the responsibility of the
company's management.  Our responsibility is to
express an opinion on these financial statements
based on our audits.

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

In our opinion, these financial statements present
fairly, in all material respects, the financial
position of the company as at December 31, 1997 and
1996 and the results of its operations and cash flows
for each of the years in the three year period ended
December 31, 1997 and for the period from inception
of the development stage, January 1, 1997 to December
31, 1997, in accordance with generally accepted
accounting principles in the United States.

Vancouver, Canada
                                     "AMISANO HANSON"
March 19, 1998
                                      Chartered Accountants


Comments by Auditors for U.S. Readers on Canada - U.S. Reporting Conflict

In the United States, reporting standards for auditors
require the addition of an explanatory paragraph
(following the opinion paragraph) when there is
substantial doubt about a company's ability to
continue as a going concern.  The accompanying
financial statements have been prepared on the basis
of accounting principles applicable to a going concern
which  assumes the realization of assets and discharge
of liabilities in the normal course of business.  As
discussed in Note 1 to the accompanying financial
statements and in respect of the company's substantial
losses from operations, substantial doubt about the
company's ability to continue as a going concern
exists.  The accompanying financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.

Our report to the shareholders dated March 19, 1998
is expressed in accordance with Canadian reporting
standards which do not permit a reference to such
uncertainty in the auditors' report when the
uncertainty is adequately disclosed in the financial
statements.

Vancouver, Canada
                                         "AMISANO HANSON"
March 19, 1998
                                          Chartered Accountants

Suite 604 - 750 West Pender Street, Vancouver, B. C.  V6C 2T7
Telephone (604) 689-0188
Facsimile (604) 689-9773
E-mail amishan@istar.ca

                                F1

<PAGE>
                     DRUCKER INDUSTRIES, INC.
                  (A Development Stage Company)
                        BALANCE SHEETS
                   December 31, 1997 and 1996 
                    (Stated in U.S. dollars)


                                 ASSETS             1997            1996            



Current
 Cash and term deposits                             $3,238,576     $          -
 Advances receivable - Notes 6 and 8                   250,709                -
                                                     
                                                     3,489,285                -
Oil and gas projects costs - Note 3                  1,275,217           50,802

                                                    $4,764,502      $    50,802



                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current
 Accounts payable and accrued expenses - Note 6     $   86,539      $     2,525 
 Advance payable - Notes 6 and 8                        50,802           50,802

Total current liabilities                              137,341           53,327

Stockholders' Equity (Deficiency) - Note 4
 Common stock $.001 par value, authorized 50,000,000
 shares:
 32,476,250 shares issued and outstanding                32,115          26,935
 Additional paid-in capital                           6,306,803       1,132,483
 Deficit accumulated during the development stages   (1,711,757)     (1,161,943)

Total stockholders' equity                            4,627,161      (    2,525)


                                                     $4,764,502      $   50,802  


Continuance of Operations - Note 1
Commitment - Note 4
Subsequent Events - Note 8



APPROVED BY THE BOARD:

"Gerry Runolfson"

"Ernest Cheung"

                               SEE ACCOMPANYING NOTES
                                        F2

<PAGE>
<CAPTION>

</TABLE>
<TABLE>
                     DRUCKER INDUSTRIES, INC.
                  (A Development Stage Company)
                    STATEMENTS OF OPERATIONS
         for the years ended December 31, 1997, 1996 and 1995
      and January 1, 1997 (Date of Inception of Development Stage) 
                      to December 31, 1997
                    (Stated in U.S. dollars)


                                                             January 1, 1997
                                                          (Date of Inception of 
                                                            Development Stage) 
                          Year ended December 31              to December 31,
 
                            1997         1996          1995          1997
<S>                       <C>           <C>           <C>            <C>

Interest income             $(135,266)   $        -    $       -     $(135,266) 

General and administrative 
 expenses - Schedule 1        247,566         3,118       46,004       247,566    

Interest expense                    -             -       33,451             -

Fiscal agent fees               3,719             -            -         3,719

Dry hole expenses -
 Schedule 2                   147,281             -            -       147,281

Exploration expenses - 
 Schedule 3                   286,514             -            -       286,514

Net loss                  $(  549,814)  $(    3,118)  $(   79,455)   $(549,814) 

Net loss per share        $(     0.02)  $(     0.00)  $(     0.00)

Weighted average shares 
 outstanding               30,167,056    26,554,183    21,575,697
</TABLE>
                                SEE ACCOMPANYING NOTES
                                         F3

<PAGE>
[CAPTION]
<TABLE>
                     DRUCKER INDUSTRIES, INC.
                  (A Development Stage Company)
          STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
    for the years ended December 31, 1989 to December 31, 1997 and 
      February 4, 1971 (Date of Inception) to December 31, 1997 
                     (Stated in U.S. dollars)

                                                          Deficit
                                                          Accumulated 
                                            Additional    During 
                        Common Stock        Paid-in       Development 
                   Shares           Amount  Capital       Stages       Total
 <S>               <C>           <C>        <C>          <C>         <C>        

Shares issued to 
 acquire Monetary
 Metals, Inc.      $  675,000    $   675    $    (675)   $       -   $       -
Shares issued 
 to  acquire
 net assets 
 of Drucker Sound 
Design Corporation  2,700,000      2,700       65,046             -      67,746
Net loss from 
 inception to 
 December 31, 1989          -         -             -    $  (8,115)      (8,115)
Net loss for year 
 ended December 
 31, 1990                   -         -             -     (144,333)    (144,333)
Five for one 
 forward split of 
 outstanding share 13,500,000     13,500      (13,500)           -            -
Funds contributed 
 by stockholder             -                 124,196            -      124,196
Sale of units for
 cash, September 
 1991               1,050,000      1,050      103,950            -      105,000
Sale of units for 
 cash, December 
 1991                 750,000        750       74,250            -       75,000
Shares issued to 
 settle debts          52,500         53        5,197       (5,250)           -
Shares issued to 
 directors as
 compensation         450,000        450       44,550      (45,000)           -
Correct funds 
 contributed to
 stockholders               -          -      (24,990)           -      (24,990)
Interest on note 
 payable                    -          -            -       (7,370)      (7,370)
Net loss for year 
 ended December 
 31, 1991                   -          -            -      (38,417)     (38,417)

Balance, December 
 31, 1991, as
 previously 
 reported          19,177,500     19,178      378,024     (248,485)     148,717
Adjustments to
 previously 
 reported
 amounts:
   Fiscal agent 
   fees                     -          -      (18,000)      (7,300)     (25,300)

Balance, December 
 31, 1991, as
 restated          19,177,500     19,178      360,024     (255,785)     123,417

Sale of common
 stock,
 March 1992           700,000        700       69,300            -       70,000
Sale of common 
 stock,
 September 1992       500,000        500       54,500            -       55,000
Net loss for 
 year ended
 December 31,    
 1992                       -          -            -      (78,078)     (78,078)

Balance, December 
 31, 1992, as
 previously 
 reported          20,377,500     20,378      483,824     (333,863)     170,339
Adjustments to 
 previously
 reported
 amounts:
   Fiscal agent 
   fees                     -          -      (12,500)     (20,600)     (33,100)

Balance, December                                                               
 31, 1992, as
 restated          20,377,500     20,378      471,324     (354,463)     137,239    

</TABLE>
                                SEE ACCOMPANYING NOTES
                                         F4


<PAGE>
[CAPTION]
<TABLE>
                    DRUCKER INDUSTRIES, INC.
                 (A Development Stage Company)
        STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
    for the years ended December 31, 1989 to December 31, 1997 and 
      February 4, 1971 (Date of Inception) to December 31, 1997 
                   (Stated in U.S. dollars)



                                                          Deficit
                                                           Accumulated 
                                             Additional    During 
                         Common Stock        Paid-in       Development 
                    Shares           Amount  Capital       Stages         Total


 <S>                <C>           <C>      <C>            <C>          <C>      

Balance forward,
 December 31,
 1992, as restated  20,377,500    20,378      471,324    (  354,463)    137,239  

Net loss for the
 year ended
 December 31, 1993           -         -            -    (  134,081)   (134,081)

Balance, December
 31, 1993           20,377,500    20,378      471,324    (  488,544)      3,158

Adjustment to
 previously
 reported amounts:
  Fiscal agent fees          -         -            -    (   27,280)   ( 27,280)

Balance, December 
 31, 1993, as
 restated           20,377,500    20,378      471,324    (  515,824)   ( 24,122)

Sale of common
 stock, July, 1994     200,000       200       29,800             -      30,000

Fiscal agent fees            -         -   (    3,000)            -    (  3,000)

Net loss for the
 year ended
 December 31, 1994           -         -            -    (  563,546)   (563,546)

Balance, December 
 31, 1994           20,577,500    20,578      498,124    (1,079,370)   (560,668)

Shares issued to
 settle debts        5,976,683     5,977      596,739             -     602,716

Net loss for the
 year ended
 December 31, 1995           -         -            -    (   79,455)   ( 79,455)

Balance, December
 31, 1995           26,554,183    26,555    1,094,863    (1,158,825)   ( 37,407)

Shares issued to
 settle debts          380,002       380       37,620             -      38,000

Net loss for the
 year ended 
 December 31, 1996           -         -            -     (    3,118)  (  3,118)

Balance, December
 31, 1996           26,934,185    26,935    1,132,483     (1,161,943)  (  2,525)

</TABLE>
                                SEE ACCOMPANYING NOTES
                                         F5

<PAGE>
[CAPTION]
<TABLE>


                          DRUCKER INDUSTRIES, INC.
                       (A Development Stage Company)
                STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
       for the years ended December 31, 1989 to December 31, 1997 and 
                     February 4, 1971 (Date of Inception)
                          to December 31, 1997 
                        (Stated in U.S. dollars)


                                                       Deficit
                                                       Accumulated 
                                         Additional    During 
                     Common Stock        Paid-in       Development 
                 Shares         Amount   Capital       Stages         Total
                                                       (Note 7)
 <S>              <C>         <C>       <C>          <C>            <C>

Balance forward,
 December 31,
 1996             26,934,185   26,935    1,132,483   (1,161,943)     (    2,525)

Sale of common
 stock, May,
 1997              5,179,500    5,180    5,174,320            -       5,179,500

Shares issued
 for finder's fee    362,565        -            -            -               - 

Net loss for the
 year ended
 December 31,
 1997                      -        -            -    (  549,814)    (  549,814)

Balance, December
 31, 1997         32,476,250  $32,115   $6,306,803   $(1,711,757)   $ 4,627,161

</TABLE>
                                SEE ACCOMPANYING NOTES
                                         F6

<PAGE>
[CAPTION]
<TABLE>


                     DRUCKER INDUSTRIES, INC.
                  (A Development Stage Company)
                     STATEMENTS OF CASH FLOW
        for the years ended December 31, 1997, 1996 and 1995
     and January 1, 1997(Date of Inception of Development Stage) 
                      to December 31, 1997
                    (Stated in U.S. dollars)


                                                              January 1, 1997
                                                              (Date of Inception
                                                              of Development
                                   Year Ended December 31,    Stage) to
                                 1997        1996        1995 December 31, 1997

<S>                          <C>           <C>          <C>         <C>

Cash flow from operating
 activities: 
  Net loss                   $(  549,814)  $( 3,118)    $(79,455)   $( 549,814)
  Adjustments to reconcile
  net loss to net cash
  used in operations:
  Advance receivable          (  250,709)         -            -    (  250,709)
  Accounts payable and
  accrued expenses                84,014     12,118       69,111        84,014

Net cash provided by
 (used in) operating
 activities                   (  716,509)     9,000    (  10,344)   (  716,509)

Cash flow used in investing
 activities
  Oil and gas project costs   (1,224,415)   (50,802)           -    (1,224,415)

Cash flow from financing
 activities:
   Proceeds from sale of common
   stock                       5,179,500          -            -     5,179,500  
   Due to a related party              -    ( 9,000)       9,000             -
   Advance payable                     -     50,802            -             -

Net cash provided by 
 financing activities          5,179,500     41,802        9,000     5,179,500

Net increase (decrease) in
 cash                          3,238,576          -      ( 1,344)    3,238,576
  Cash, beginning of period            -          -        1,344             -

Cash and term deposits, end
 of period                   $ 3,238,576   $      -     $      -   $ 3,238,576


Supplemental Disclosures of Cash Flows:
Stock issued for payment of accounts payable in 1996 $38,000 (1995:  $243,716)
Stock issued for payment of Promissory note in 1995 $359,000

</TABLE>
                                SEE ACCOMPANYING NOTES
                                         F7
<PAGE>
[CAPTION]
<TABLE>
                     DRUCKER INDUSTRIES, INC.
                  (A Development Stage Company)
          SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
        for the years ended December 31, 1997, 1996 and 1995
     and January 1, 1997 (Date of Inception of Development Stage) 
                      to December 31, 1997
                     (Stated in US Dollars)


                                                                 January 1, 1997
                                                                  (Date of 
                                                                  Inception of
                                                                  Development 
                                                                  Stage) to
                                1997          1996       1995     December 31,
                                Total         Total      Total         1997

<S>                           <C>           <C>         <C>          <C> 

Accounting                    $   9,539     $ 2,745     $  7,985     $   9,539

Consulting - Note 6              32,185           -       36,000        32,185

Foreign exchange (gain) loss  $(    778)    $(3,138)    $(     5)    $(    778)

Interest and bank charges           406           -          146           406

Investor relations               45,280           -            -        45,280

Legal                            59,795           -          220        59,795

Office and general               29,776         373        1,362        29,776

Printing                         10,059           -            -        10,059

Promotion                         1,409           -            -         1,409

Rent                              7,376           -            -         7,376

Telephone                         6,741           -          296         6,741

Travel                           45,778           -            -        45,778

Write-off of advances                 -       3,138            -             -

                              $ 247,566     $ 3,118    $  46,004    $  247,566
      
</TABLE>      
                                SEE ACCOMPANYING NOTES
                                     SCHEDULE #1      

<PAGE>
[CAPTION]
<TABLE>


                       DRUCKER INDUSTRIES, INC.
     (A Development Stage Company) SCHEDULE OF DRY HOLE EXPENSES
        for the years ended December 31, 1997, 1996 and 1995
     and January 1, 1997 (Date of Inception of Development Stage) 
                        to December 31, 1997
                       (Stated in US Dollars)


                                                                January 1, 1997
                                                              (Date of Inception
                                                                 of Development 
                                                                    Stage) to
                                                                   December 31, 
Fuxian Concession             1997         1996         1995          1997
<S>                       <C>           <C>           <C>           <C>

Administration            $   3,484     $       -     $       -     $  3,484

Amortization                  2,827             -             -        2,827

Audit                         1,875             -             -        1,875

Consulting                   10,875             -             -       10,875

Entertainment                 2,347             -             -        2,347

Office supplies                 582             -             -          582

Other                         4,454             -             -        4,454

Surveying                   105,625             -             -      105,625

Travel                       14,713             -             -       14,713

Wages and benefits              499             -             -          499

                          $ 147,281     $       -     $       -     $ 147,281

</TABLE>
                                 SEE ACCOMPANYING NOTES
                                      SCHEDULE #2



<PAGE>
[CAPTION]
<TABLE>

                       DRUCKER INDUSTRIES, INC.
                    (A Development Stage Company) 
                   SCHEDULE OF EXPLORATION EXPENSES
          for the years ended December 31, 1997, 1996 and 1995
       and January 1, 1997 (Date of Inception of Development Stage) 
                        to December 31, 1997
                       (Stated in US Dollars)



                                                                 January 1, 
                                                                 1997 (Date of 
                                                                 Inception of
                                                                 Development 
                                                                 Stage)
                        Ninxia      Shaanxi  1997    1996   1995 to December 31,
                      Concession  Concession Total   Total  Total     1997

<S>                     <C>       <C>       <C>       <C>     <C>     <C>

Administration          $  6,173  $      -  $  6,173  $    -  $    -  $  6,173                         

Amortization               9,573       568    10,141       -       -    10,141

Audit                      1,875     1,250     3,125       -       -     3,125

Entertainment              1,463     6,006     7,469       -       -     7,469

Insurance                  5,256         -     5,256       -       -     5,256

Office Supplies            3,950     1,740     5,690       -       -     5,690

Other                        676     2,396     3,072       -       -     3,072

Rental                       918         -       918       -       -       918

Repairs and maintenance    1,983         -     1,983       -       -     1,983

Surveying and testing     56,250   101,107   157,357       -       -   157,357

Telephone                  2,242     1,133     3,375       -       -     3,375

Travel                    25,285    22,720    48,005       -       -    48,005

Wages and benefits        27,194     6,756    33,950       -       -    33,950

                        $142,838  $143,676  $286,514  $    -  $    -  $286,514

</TABLE>
                                SEE ACCOMPANYING NOTES
                                     SCHEDULE #3

<PAGE>
                        DRUCKER INDUSTRIES, INC.
                     (A Development Stage Company)
                        STATEMENTS OF CASH FLOW
          for the years ended December 31, 1997, 1996 and 1995
      and January 1, 1997 (Date of Inception of Development Stage) 
                          to December 31, 1997
                        (Stated in U.S. dollars)


Note 1    Continuance of Operations

          The company is in the development stage and is in the
          process of exploring its resource properties and has
          not yet determined whether these properties contain
          reserves that are economically recoverable.  The
          recoverability of amounts shown for resource
          properties is dependent upon the discovery of
          economically recoverable reserves and confirmation of
          the company's interest in the underlying properties,
          the ability of the company to obtain necessary
          financing to satisfy the expenditure requirements
          under resource property agreements and to complete the
          development of the properties, and upon future
          profitable production or from the sale thereof.
     
          These financial statements have been prepared on a
          going concern basis.  The company has accumulated a
          deficit of $1,711,757 since inception.  Its ability to
          continue as a going concern is dependent upon the
          ability of the company to generate profitable
          operations in the future and/or to obtain the
          necessary financing to meet its obligations and repay
          its liabilities arising from normal business
          operations when they come due.
 
Note 2    Summary of Significant Accounting Policies

          Organization
       
          The company was incorporated in Idaho on February 4,
          1971, as Monetary Metals, Inc.  On December 14, 1989,
          the company acquired all the net assets of Drucker
          Sound Design, Inc. in exchange for 2,700,000 shares
          (13,500,000 shares after split) of common stock. On
          December 30, 1989, the company changed its name to
          Drucker Sound Design, Inc., and on June 19, 1990, the
          company changed its domicile to Delaware.  On
          September 5, 1991, the company changed its name to
          Drucker Industries, Inc., and forward split the
          outstanding shares of common stock on the basis of
          five for one.

          Line of Business

          The company currently is in the business of
          exploration and development of oil and gas properties
          in China.
  
          Development Stage Company
 
          The company is a development stage company as defined
          in Statement of Financial Accounting Standards No. 7.
          The  company is devoting substantially all of its
          present efforts to the business of exploration and
          development of oil and gas properties in China. For
          the purposes of providing cumulative amounts for the
          statements of operations and cash flow, these amounts
          consider only those losses for the period from January
          1, 1997 to December 31, 1997, the period in which the
          company has undertaken a new development stage
          activity.
 
          Income Taxes
          
          The company uses the liability method of accounting
          for income taxes pursuant to Statement of Financial
          Accounting Standards, No.
          109 "Accounting for Income Taxes".

                                  F8

<PAGE>

Note 2    Summary of Significant Accounting Policies -
(cont'd)

          Net Loss Per Share
          Net loss per share is based on the weighted average
          number of common shares outstanding during each year.
 
          Values

          The amounts shown for oil and gas project costs
          represent costs to date and do not necessarily reflect
          present or future values.
     
          Capital Assets

          Capital assets are recorded at cost.  Amortization is
          provided on the declining balance method at the rate
          of 20% per annum.

          Oil and Gas Project Costs

          The company follows the successful efforts method of
          accounting for its oil and gas properties.  Under this
          method, the initial acquisition costs and the costs of
          drilling and equipping development wells, are
          capitalized.  The costs of drilling exploratory wells
          are initially capitalized and, if subsequently
          determined to be unsuccessful, are charged to
          operations as dry hole expenses.  Costs and reserves
          of properties are aggregated by country.  All other
          exploration expenditures, including geological and
          geophysical costs and annual rentals on exploration
          acreage, are charged to operations as incurred.  Lease
          acquisition costs, subsequently determined to be
          impaired in value, are charged to operations.

          No gains or losses are recognised on the sale or
          disposition of oil and gas properties except when
          there is a material disposition of reserves of a
          country.  All other proceeds are credited against the
          cost of the related properties.

          Depletion of the net capitalized costs of producing
          wells and leases is charged to operations on the unit-
          of-production method, by country, based upon estimated
          proved reserves.

Note 3    Oil and Gas Project Costs - Note 6

          By a participation agreement dated January 21, 1997,
          the company agreed to pay 100% of all the costs of
          exploring and developing the Ningxia oil and gas
          concessions in Yanchi County, Ningxia Province and
          WuQi county, Shaanxi Province, Peoples Republic of
          China as consideration for an undivided 50% interest
          in all of the profits generated from the concession.
   
          By a participation agreement dated January 21, 1997,
          the company agreed to pay 100% of all the costs of
          exploring and developing the Shaanxi oil and gas
          concessions in North Shaanxi Province, Peoples
          Republic of China as consideration for an undivided
          50% interest in all of the profits generated from the
          concessions.

          By a participation agreement dated September 9,1997,
          the company agreed to pay 100% of all the costs of
          exploring and developing the Fuxian oil and gas
          property in Fuxian County, Shaanxi Province, Peoples
          Republic of China as consideration for an undivided
          50% interest in all of the profits generated from the
          properties.

                                 F9


<PAGE>

Note 3    Oil and Gas Project Costs - (cont'd)

          The parties to the above agreements are related to the
          company by virtue of common directors.

                                                                 1997 1996
Oil and Gas Project Costs      Ningxia    Shaanxi   Fuxian     Total Total

Advance to (due from) project  $953,786 $403,008 $(131,257) $1,225,537 $50,802
Capital assets                   38,292    2,270     9,118      49,680       -

                               $992,078 $405,278 $(122,139) $1,275,217 $50,802

Included in advance to Ningxia project is US$743,000, held  in a US currency 
account.

Note 4    Common Stock

          During the year ended December 31, 1997, the company
          issued 5,179,500 shares of common stock at $1.00 per 
          share for proceeds of $5,179,500.

          The company also issued 362,565 shares of common
          stock as a finder's fee.
  
          Commitment

          Share Purchase Warrants
          
          At December 31, 1997, 5,179,500 share purchase
          warrants are outstanding.  Each warrant entitles the holder to
          purchase one additional unit of the company at $1.50
          per unit until September 30, 1998.  Each unit consists
          of one common share of the company and one additional
          warrant.  Each additional warrant entitles the holder
          to purchase one additional common share of the company
          at $2.00 until September 30, 1999.

Note 5    Income Taxes

          No provision for income taxes has been provided in
          1997 and 1996 due to the net loss.  The company has
          net operating loss carry forwards, which expire
          commencing in the year 2004 totalling approximately
          $1,700,000, the benefits of which have not been
          recorded.

          Under the provisions of the Tax Reform Act of 1986,
          when there has been a change in an entity's ownership
          of fifty percent or greater, utilization of net
          operating loss carry forwards may be limited. As a
          result of equity transactions occurring through
          December 31, 1997, the company will be subject to such
          limitation. The annual limitations have not been
          determined.

                                F10

<PAGE>

Note 6    Related Party Transactions - Notes 3 and 8

          During the year ended December 31, 1995, a director of
          the company charged consulting fees of $36,000.
 
          Advances receivable of $250,709 (1996:  $Nil) are due
          from a company with a common director and are
          unsecured, non-interest bearing and have no specific
          terms for repayment.

          Advance payable of $50,802 (1996:  $Nil) due to a
          company with a common director, are unsecured, non-
          interest bearing and have no specific terms for
          repayment.

          Accounts payable and accrued expenses include $55,338
          (1996: $Nil) payable to a company with a common director.

          Oil and gas project costs - advances to (due from)
          project are advanced to companies with a common
          director .  These advances are unsecured, non-interest
          bearing and have no specific terms for repayment.
 
          Oil and gas project costs - Capital assets have been
          incurred with companies with a common director.
  
Note 7    Prior Period Change

          The company determined that accounts payable at
          December 31, 1993 was understated by $85,680 due to
          accrued fiscal agent fees not recorded.  Of these
          fees, $27,280 related to the year ended December 31,
          1993 and $58,400 related to years prior to the year
          ended December 31, 1993. Consequently accounts payable
          at December 31, 1993 and fiscal agent fees for the
          year then ended and deficit accumulated during the
          development stage December 31, 1993 and at December
          31, 1992 and additional paid-in capital at December
          31, 1992 were restated to reflect this adjustment.
 
Note 8    Subsequent Events

          Subsequent to December 31, 1997:

          -    the company received $199,982 in respect of
               advances receivable outstanding at December 31, 1997.
 
          -    the company paid $50,802 in respect of
               advances payable outstanding at December 31, 1997.

          -    the company paid $7,500 included in accounts
               payable to a company with a common director.

                                F11