SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB/A

                  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 1998

                         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            No    X
                                   -------        ------

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 $157,538 from
interest income only and operations  expenses totaled $798,668 for a net loss of
$(641,130).

State the aggregate market value of the voting stock held by  non-affiliates  of
the Registrant: $6,170,487 as of December 31, 1998 (a $.19/share bid at December
28, 1998).

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, 1998.



<PAGE>



                                TABLE OF CONTENTS

                                     PART I
                                                                            Page

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

Item 2.  Properties ..........................................................11

Item 3.  Legal Proceedings....................................................12

Item 4.  Submission of Matters to a Vote of
         Security Holders.....................................................12

                                     PART II

Item 5.  Market for Registrant's Common Stock and
         Security Holder Matters .............................................12

Item 6.  Management's Discussion and Analysis of
         Financial Condition and Results of
         Operations ..........................................................14

Item 7.  Financial Statements and Supplementary Data..........................20

Item 8.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure...............................20

                                    PART III

Item 9.  Directors and Executive Officers of the
         Registrant ..........................................................21

Item 10. Executive Compensation...............................................23

Item 11. Security Ownership of Certain Beneficial
         Owners and Management................................................25

Item 12. Certain Relationships and Related
         Transactions.........................................................27

                                     PART IV

Item 13. Exhibits, Financial Statement Schedule
         and Reports on Form 8-K..............................................28


<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  joint  venture  participations  in  oil  exploration
projects in China in fall 1997 and in Egypt in 1999.

         Current Business

         The  Company  was  inactive  from 1994 until late 1996.  The  Company's
primary  business  focus is the  acquisition,  exploration  and  development  of
mineral  properties  and oil and natural  gas  properties.  In early  1997,  the
Company negotiated joint venture farm-in agreements with two Vancouver based oil
companies with whom the  companies'  officers and directors are affiliates for a
50%  interest in certain oil  projects in the  People's  Republic of China.  The
projects were  unsuccessful  and were  abandoned in 1998,  although  Company the
retains an investment in China in the Shaanxi  exploration  project which is not
under active exploration. The Registrant has a participation in the Gulf of Suez
joint venture in Egypt,  which has in 1999 made one oil  discovery,  has drilled
one dry hole, and has a third well being drilled.

         The Company  anticipates  that its  business  will  continue to require
capital to make required  financial  investments under exploration joint venture
agreements. The Company intends to use the capital Markets of the United States,
Canada, 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 Report, nor
anticipated sources of debt or equity funding, except its cash on hand.

         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.

2

<PAGE>




         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 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

                  Subsidiaries

                   DRUCKER PETROLEUM, INC., a British Virgin Islands corporation

         (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.  The  Company  terminated  its China  exploration
ventures 1998 after drilling a dry hole.

         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.  In 1998, it terminated and
abandoned its joint venture in China after drilling one dry hole and finding its


3

<PAGE>



other China  prospects  to bear slim  chances of success.  In 1998,  the Company
began a participation  in the West Gharib,  Egypt  concession and one successful
well was drilled there in 1999.

         During  the  last  five  (5)  fiscal  years,   the  Company   conducted
exploration activities on oil and gas properties for joint venture participation
in China and Egypt. 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
participatioon  in  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  non-affiliated  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.  When the Company is
merely a participant in a venture on a minority basis,  all decisions  regarding
drillers,  operations, and consultants will be made by third party management of
the venture and not by the registrant.

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

         Exploration Results      1997          1998              Prior Years
         -------------------      ----          ----              -----------

         Gas Wells                0             0                 0
         Dry Holes                1             0                 0
         Oil Wells                0             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 other
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 is a
participant  in the West Gharib,  Guf of Suez,  Egypt  exploration  venture (see
"Registrant's  Joint  Venture  Interests"  hereafter).   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 in the China venture.


4

<PAGE>



         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.

<TABLE>
<CAPTION>

                                   Year Ended December 31,
<S>                                    <C>        <C>            <C>                <C>                  <C>
                                       1994       1995           1996               1997                 1998

Participation Payments                 $0         $0             $50,802            $1,275,217           $1,262,106
Under Agreements

                             Total     $0         $0             $50,802            $1,275,217           $1,262,106
</TABLE>

         In 1997, the Company offered and sold 5,179,500 units at $1.00 per unit
pursuant to an Offering Memorandum. The cash proceeds of this offering have been
used to fund the Company operations. 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  would  have  expired  in
eighteen months from the closing of the Offering Memorandum, but the warrant was
extended  to March 31,  2000.  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 has been extended to March 31, 2001.

(d)  Narrative Description of Business.

         The  primary  initial  focus  of  business  operations  was to  make an
investment in oil and gas exploration joint ventures in China. The Chinese joint
venture has been terminated,  although the Company retains a project  investment
interest which gives the Company the right to  participate in exploratory  wells
by  paying  100% of the  drilling  cost  for a 50%  interest.  The  Company  has
participated in a well in Egypt in the Gulf of Suez, which has been completed as
an oil discovery in July 1999.  Further wells are planned in Egypt. In 1998, the
Company did not complete any successful oil or gas wells.

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

Governmental Regulation for Oil Exploration  Operations

                  General - The Registrant's  oil and gas production  activities
are  subject to  extensive  regulation  by  numerous  national,  state and local
governmental  authorities  in  the  countries  where  project  participation  is
commenced.   Taxation   and   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.


5

<PAGE>



                  State Regulation - The production operations of the Registrant
are subject to regulation by national bureaus or ministries which have authority
to issue permits prior to the  commencement  of drilling  activities,  establish
allowable  rates of production,  control spacing of wells,  establish  prices or
taxes, prevent waste and protect correlative rights, and aid in the conservation
of 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 national 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.

                  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.

Registrant's Joint Venture Interests

West Gharib Concession


6

<PAGE>



         On April 27, 1998,  the Company,  through its wholly owned  subsidiary,
Drucker  Petroleum,  Inc. (DPI),  entered into a farm-in agreement to acquire an
undivided  20%  participating  interest  in the right to explore for and exploit
petroleum  in a  concession  located in West Gharib,  Gulf of Suez,  Egypt.  The
Agreement provided that DPI shall pay:

         1.  $352,000 within seven days of the execution of the agreement (paid)
         2.  pay 20%  of all  costs  and expenses  incurred  subsequent  to  the
execution of the agreement related to this concession
         3. 40% of the  costs  and  expenses  associated  with the  drilling  of
exploratory well to a maximum cost to the Company of $600,000;  thereafter,  DPI
shall pay 20% of all costs and  expenses  associated  with any further  activity
associated with the concession.
         4. In addition,  DPI provided a bank  guarantee  of  $2,000,000  within
seven  days  of the  execution  of the  agreement,  being  40%  of a  letter  of
guarantee.

         DPI has the right but not the  obligation to  participate in additional
wells in the West Gharib, Egypt concession.

         DPI's  interest  in this oil and gas  concession  is  subject to 7% net
profit interest  payable to a related  company,  after DPI has recovered all its
exploration and development  expenditures.  This company is related by virtue of
common directors.

         Drucker   Petroleum,   Inc.,  a  wholly  owned  subsidiary  of  Drucker
Industries, Inc., holds the 20% interest.  Tanganyika Oil Company, Ltd., through
its wholly owned subsidiary,  Dublin International Petroleum (Egypt) Limited, is
the operator of the West Gharib block holding a 50% interest and GHP Exploration
(West Gharib) Ltd., a wholly owned subsidiary of  TransAtlantic  Petroleum (USA)
Corp. holds the remaining 30% interest.

         The  Hana-1  well  was  drilled  to a total  depth  of  7,415  feet and
production  casing was landed at 5,475 feet in order to evaluate the prospective
Middle Miocene Kareem  formation.  Logs run through casing indicate a gross sand
section  of 116  feet  with 60 feet of net  sand pay  which  is  believed  to be
hydrocarbon  bearing. The uppermost 20 feet of sand interval was perforated from
4,868 to 4,888 feet and the well  flowed oil to surface.  Typical  wells in this
region require  pumping  equipment to maximize  production  When assisted with a
nitrogen string set at 2,500 feet, the Hana-1 well flowed at rates averaging 500
barrels of oil per day at 25.8 degrees API gravity oil with zero water content.

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.

     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.  These  requirements  may be met by


7

<PAGE>



private  placement of stock or loans or sale of working  interests.  The Company
will need to develop additional working capital for future operations.

Industry Segments

The  company's  industry's  segment is the oil and gas  industry.  The company's
geographic segments are Canada, China and Egypt.

<TABLE>
<CAPTION>


                                                                             December 31, 1998
                                     Canada             China             Egypt              Total


Identifiable Assets
<S>                                         <C>                <C>              <C>                 <C>
Current                                     $    2,771,380     $    -            $    -             $    2,771,380

Oil and gas projects                                     -          895,306           366,800            1,262,106
                                            --------------     ------------      ------------       --------------
                                            $    2,771,380     $    895,306      $    366,800       $    4,033,486
                                            ==============     ============      ============       ==============


                                                                             December 31, 1997
                                     Canada             China             Egypt              Total


Identifiable Assets


Current                                     $    3,489,285     $    -            $    -             $    3,489,285

Oil and gas projects                                     -          1,275,217         -                  1,275,217
                                            --------------     --------------   -------------       --------------
                                            $    3,489,285     $    1,275,217    $    -             $    4,764,502
                                            ==============     ==============   =============       ==============
</TABLE>

<TABLE>
<CAPTION>

                                                                         Year ended December 31,


                                                                           1998              1997
                                                                           ====              ====


Operations
<S>                                                                    <C>                <C>
Canada                                                                 $(   24,8$7)       (   116,019)
China                                                                  (   368,290)       (   433,795)
Egypt                                                                  (   247,973)                 -
                                                                    ---------------    ---------------
                                                                       $(  641,$30)       (   549,814)
                                                                    ===============    ===============

</TABLE>

         (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,  1998,  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

8

<PAGE>



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 futures
market occurred in January 1986, and the Company could be adversely  affected if
further drops occur in the future.

         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.

         Oil  concessions  in foreign  countries  are usually  controlled by the
Government,  which after 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 oil and gas opportunities.

          The 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  participation  interests,  hiring  personnel  and
marketing.  Accordingly, a high degree of competition in these areas is expected
to continue.

         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 exploration
operations of the Company are subject to local, provincial and national laws and
regulations  in the  country  of  Egypt  and in  China  if  any  exploration  is
recommended. To date, compliance with these regulations by the Company has had


9

<PAGE>



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 joint ventures
may  be  adversely  affected  by  significant  political,  economic  and  social
uncertainties  in the area of  interest.  Any  changes  in the  policies  by the
Government of the area of interest  could  adversely  affect the company area of
interest  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,  wars, 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, 1998,  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 bottle in Vancouver, B.C.


10

<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)      West Gharib Concession

                  On April 27, 1998,  DPI entered  into a farm-out  agreement to
acquire an undivided 20% participating  interest in the right to explore for and
exploit petroleum in a concession  located in West Gharib,  Gulf of Suez, Egypt.
The terms of the Agreement are that DPI agreed to pay for a 20% interest:

         a.  $352,000 within seven days of the execution of the agreement (paid)
         b.  pay  20% of  all costs  and  expenses  incurred subsequent  to  the
execution of the agreement related to this concession
         c. 40% of the  costs  and  expenses  associated  with the  drilling  of
exploratory well to a maximum cost to the Company of $600,000;  thereafter,  DPI
shall pay 20% of all costs and  expenses  associated  with any further  activity
associated with the concession.
         d. In addition,  DPI provided a bank  guarantee  of  $2,000,000  within
seven days of the execution of the agreement.

                  DPI's interest in this oil and gas concession is subject to 7%
net profit interest payable to a related company, Richco Investors,  Inc., after
DPI has recovered all its exploration and development expenditures. This company
is related by virtue of common directors.


11

<PAGE>



         (j)  Criteria:

         The Company  will  consider  the  following  criteria  when  evaluating
whether to participate in an oil and gas prospect in any area of interest:

                  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, 1998.


                                     PART II

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

         The  Company's  common  stock is now  traded on the  "Over-the-Counter"
market on 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,  1998,  1997,  and 1996 as
follows:

                                                    Bid
                                            High             Low
1998
         First Quarter                      .53               .24
         Second Quarter                     .62               .18
         Third Quarter                      .50               .14
         Fourth Quarter                     .29               .17

12

<PAGE>



                                                     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

                                                      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

         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, 1998, the Company had 84  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.


13

<PAGE>



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

<TABLE>
<CAPTION>

                                                    (A DEVELOPMENT STAGE COMPANY)
                                                   Fiscal Year Ended December 31,
                                    1998             1997              1996             1995              1994
                                    ----             ----              ----             ----              ----
<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                           0                 247,566           3,118            46,004            89,541

Income (loss)
from
operations                         616,263           (685,080)         0                0                 0

Other income
(expense)                          157,538           135,266           0                (33,451)                  (64,769)

Amortization of
License Agreement                  0                 0                 0                0                 (409,236)
(write off -1994)

Income (loss)
before income
taxes                              (641,130)         (549,814)         (3,118)          (79,455)          (563,546)

Provisions for
income taxes                       0                 0                 0                0                 0

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

Average shares
outstanding                        32,476,250        30,167,056        26,554,183       21,575,697        20,477,500

</TABLE>

14

<PAGE>

<TABLE>
<CAPTION>


                                    FY               FY                FY
                                    1998             1997              1996             1995              1994
                                    ----             ----              ----             ----              ----

<S>     <C>    <C>    <C>    <C>    <C>    <C>
Balance Sheet Data:

Current Assets                     2771,380          3,489,288        0                 0                 1,344

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

Current                            47,455            137,341          53,327            37,407            562,012
Liabilities

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

Deficit Accum-
ulated during
Development
Stage                              (2,352,887)       (1,711,757)      (1,161,943)       (1,158,825)       (1,079,370)

Stockholders'
equity   (deficiency)              3,986,031         4,627,161        (2,525)           (37,407)          (560,668)

</TABLE>

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

         The  Company  has no primary  income  source,  other than  interest  on
deposits,  at this time.  Capital from private  placements or borrowing  against
assets may be  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  operating  revenues  for the twelve  month  period
ending  December 31,  1998,  but had  interest  income of $157,538.  The Company
recommenced limited business operations in late 1996, and incurred a significant
net loss from operations in 1997 $685,080  resulting from costs of participation
in its joint oil exploration  venture in Peoples  Republic of China which it has
now  terminated.  The Company may continue to show losses  resulting  from joint
venture  participation for an indeterminate time. In 1997, the Company commenced
regular operations and incurred  significantly  greater expenses which continued
through 1998.

                  The Company incurred the following expenses in the past fiscal
year compared to the 1997 fiscal year.

15

<PAGE>

<TABLE>
<CAPTION>


                                                              December 31,                       December 31,
                                                                      1997                               1998
<S>                                                              <C>                                <C>
OPERATING EXPENSES

Accounting                                                         $9,539                            $44,651

Consulting                                                         32,185                             38.288

Foreign exchange (gain) loss                                        (778)                              1,111

Interest and bank charges                                             406                                619

Investor relations                                                 45,280                              9,834

Legal                                                              59,795                             12,104

Office and general                                                 29,776                             29,957

Printing                                                           10,059                                  0

Promotion                                                           1,409                                  0

Rent                                                                7,376                              8,020

Telephone                                                           6,741                              2,718

Transfer Agent                                                          0                             11,042

Travel                                                             45,778                                  0

Write-off of advances                                                   -                             24,061

TOTAL OPERATING COSTS                                            $247,566                           $182,405
                                                           ============================= ==================================

</TABLE>

         It is expected that expenses will continue at a significantly increased
rate  due  to  costs  of  seeking  and   investigating   oil  opportunities  and
implementing   exploration  pursuant  to  joint  ventures.   In  the  event  oil
exploration  joint ventures continue to be unsuccessful,  continued  significant
losses should be anticipated.

                  Cash Flows:

                  The Company  has  achieved  no  revenues  from any  operations
during the year, ending December 31, 1998.

                  At this time, the Company is dependent upon its cash reserves,
interest income, private placements, or loans for future operations and funding.
When its cash  reserves are depleted,  it will have to either  borrow money,  if
possible, or raise funds through subsequent public or private offerings to

16

<PAGE>



continue  operations until when, or if, it ever develops sufficient revenue from
its assets to maintain  operations.  If  operating  losses  continue at the same
rates in the  future as in 1997 and 1998,  the  Company  will  deplete  its cash
within the 2000 fiscal year. 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 1998 the  Company's  assets  were  $4,033,486  compared  to
$4,764,502  at  end of  1997.  The  decrease  was a  result  of  write-offs  for
expenditures for the exploration (dry hole) cost of the China joint ventures and
initial expenses for drilling participations in Egypt.

         The liabilities, nearly all of which are current liabilities, decreased
significantly  as a result of reduction of accounts  payable related to expenses
for the oil  exploration  joint  venture  in China.  At year end  1998,  current
liabilities were $47,455 a decrease of 65% over the 1997 year end liabilities of
$137,341.

         Stockholders'  equity at year end 1998 was $3,986,031,  a decrease over
the  1997  stockholder's   equity  of  $4,627,161,   resulting  from  losses  on
operations.

         From the aspect of whether the Company can continue toward its business
goal of  exploring  for oil,  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  any oil  exploration  operations  or
participations for any extended period beyond 1999.

Results of Operations for Year Ended December 31, 1998 as Compared to Year Ended
December 31, 1997

         The Company had no revenues from  operations in 1998;  however,  it had
interest  income  of  $157,538.  The  Company  had no  revenues  in 1997 but had
interest income of $135,266.

         In 1998,  the Company  incurred  $182,40 in general and  administrative
expenses, a decrease from $247,566 in 1997. The Company had dry hole expenses of
$40,403 in 1998 compared to $147,281 in 1997. The Company  incurred  $575,860 in
exploration  expenses in 1998 as compared to $286,514 in exploration expenses in
1997.  The  Company  incurred  a loss on  operations  of  ($798,668)  in 1998 as
compared to the loss on operations of $ ($685,080) in 1997.


17

<PAGE>



         The Company  expects that its expenses for Joint Venture  participation
in its Egyptian exploration will continue at a substantially  increased rate for
1999.  The Company  anticipates  minimal  expenditures  for its  previous  China
prospects which have been abandoned or are inactive.

         The Company incurred a net loss in 1998 of ($641,130) and in 1997 had a
net loss of ($549,814).  The net loss per share was ($.02) in 1998 and ($.02) in
1997.

<TABLE>
<CAPTION>

                              EXPLORATION EXPENSES


                                                                                                                     January 1,
                                                                                                                     1997 (date of
                                                                                                                     Inception of
                                                                                                                     Exploration
                                                                                                                     Stage) to
Nixgxia         Shaanxi                                                                                              December
Concession      Concession          West Gharib         1998 Total           1997 Total          1996 Total          31, 1998
--------------  ------------------- ------------------- -------------------  ------------------  ------------------- ---------------
<S>   <C>                   <C>                <C>                 <C>                 <C>                    <C>           <C>
      $312,126              $15,761            $247,973            $575,860            $286,514               $-            $862,374

</TABLE>

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

         The Company 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 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.

         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 Operation for the Fiscal Years Ended  December 31, 1996
and 1995

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


18

<PAGE>



         The Company incurred operating  expenses,  all of which are 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.

         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 drilling expense  obligations on its Egyptian oil venture
participation

         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 cash reserves.

         The Company had current  assets of  $2,763,628 at December 31, 1998 and
had current liabilities of $47,455.

         Long Term.

         On a long-term basis,  the Company has no fixed assets.  It did have at
year end $2,763,628 in 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 oil exploration ventures, at this time, for possibility of future
income, none of which are assured.

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.


19

<PAGE>



         As of the date of this report, the Company has material commitments for
capital  expenditures  within  the next year,  pursuant  to the  Egyptian  joint
ventures, which amounts may exceed its available capital of $2,000,000.

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.



20

<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, 1998.  The  directors of the Company
are elected every year and serve until their successors are elected and qualify.

<TABLE>
<CAPTION>

Name                                        Age                        Title                     Term
----                                        ---                        -----                     ----
<S>                                         <C>               <C>                                <C>
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

</TABLE>

         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.

21

<PAGE>



                              MANAGEMENT EXPERIENCE

         Gerald  William  Runolfson,  President and  Director,  age 58, 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 49, 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 1994 - 1996 he was Vice President of Finance of BIT Integration Technology,
Inc. of Toronto,  Canada. From May 1995 to present he has served as President of
Richco Investors,  Inc. of Vancouver,  BC and from 1998 to present he has served
as President of Sino-City Gas, Inc. (a Delaware corporation).

     From  1992-1995,  he served as a  Director  of Tele  Pacific  International
Communications  Corp.  (VSE).  He  has  also  served  as a  Director  of  Richco
Investors,  Inc.  (CDN) since  1995.  From  1995-1996,  he was a Director of BIT
Integration  Technology,  Inc.  (ASE).  Since  1997,  he has served and is still
serving as Director of the following  companies:  Agro  International  Holdings,
Inc. (VSE); Spur Ventures,  Inc. (VSE); Drucker Industries,  Inc. (NASD Bulletin
Board); Xin Net Corp. (NASD Bulletin Board);  Sino-City Gas, Inc. (NASD Bulletin
Board); Global-Pacific Minerals, Inc. (TSE); and Pacific E-Link Corp. (VSE).

         He has held a Canadian Securities license but is currently inactive. He
has been a Director of Registrant since January 1997.

         Patrick Pak Ling Chan, age 45, 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 49, 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



22

<PAGE>



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 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,  1998,  (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.


23

<PAGE>

<TABLE>
<CAPTION>


                                     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(#)
<S>                      <C>           <C>              <C>           <C>                       <C>                  <C>
Gerald                   1998          0                0             0                         0                    0
Runolfson,
President and
Director

                         1997          0                0             0                         0                    0

                         1996          0                0             0                         0                    0



Ernest Cheung,           1998          0                0             0                         0                    0
Secretary and
Director

                         1997          0                0             0                         0                    0

                         1996          0                0             0                         0                    0



Patrick Chan,            1998          0                0             0                         0                    0
Director

                         1997          0                0             0                         0                    0

                         1996          0                0             0                         0                    0



Joseph Tong,             1998          0                0             0                         0                    0
Director

                         1997          0                0             0                         0                    0

                         1996          0                0             0                         0                    0
                         ============  ===============  ============  ========================  ===================  ===============
</TABLE>

         (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, 1998 (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)


24

<PAGE>

<TABLE>
<CAPTION>


                                    Cash Compensation                           Security Grants


Name                              Annual             Meeting          Consulting              Number          Number of Securities
                                  Retainer           Fees ($)         Fees/Other              of              Underlying
                                  Fees ($)                            Fees ($)                Shares(#)       Options/SARs(#)
<S>                               <C>                <C>              <C>                     <C>             <C>
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
================================  =================  ================ ======================  ==============  ======================

</TABLE>

         (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.

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, 1998.


25

<PAGE>

<TABLE>
<CAPTION>


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

</TABLE>

         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.

<TABLE>
<CAPTION>

Title             Name of                            Amount and                         Percent
of                Beneficial                         Nature of                          of
Class             Owner                              Beneficial Ownership               Class
-----             ----------                         --------------------               -------
<S>               <C>                                <C>                                <C>
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

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


26

<PAGE>



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

</TABLE>

     (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)  in 1997.  The  Registrant  had entered into joint ventures in China
with Richi and Milco in which  Registrant would pay 100% of the cost of drilling
for a 50% interest in the wells.  Such ventures were  unsuccessful and have been
terminated.  Registrant  paid  $40,403  in  dry  hole  costs  in  1998  for  the
participation  and has  invested a total of $895,306  for its  participation  in
China exploration venture.

         The  Company's  interest  in the  West  Gharib  Egyptian  oil  and  gas
concession is subject to a 7% net profit interest  payable to a related company,
Richco Investors,  Inc., owned by Ernest Cheung,  director and secretary,  after
DPI has recovered all of its  exploration  and  development  expenditures.  This
company is related by virtue of common directors.

         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.

     Accounts  payable  and accrued  expenses  include  $4,446 ( 1997:  $55,338)
payable to a company with a common director.

         During the year ended December 31, 1998, the Company wrote-off advances
to a related company in the amount of $24,061. This company is related by virtue
of a common director.

         The Company was charged the following expenses by a related company:


27

<PAGE>

<TABLE>
<CAPTION>



                                                                                                  January 1, 1997
                                                                                                  (Date of Incep-
                                                                                                  tion of Explora-
                                                                                                  tion Stage) to
                                                                                                  December 31,
                                    1998            1997                           1996           1998
                           -----------------------  --------------------- ----------------------  ----------------------
<S>                                        <C>                         <C>                    <C>                <C>
Consulting                                      $-                     $-                     $-                 $36,000
Office & general                            13,785                      -                      -                  13,795
Rent                                         8,020                      -                      -                   8,020
                           -----------------------  --------------------- ----------------------  ----------------------
                                           $21,805                      -                      -                 $57,815
                           =======================  ===================== ======================  ======================

</TABLE>

         This company was related by virtue of common directors.

         The Company  also issued  362,565  shares of common stock as a finder's
fee to a non-affiliate.

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, 1998 and 1997 are filed as part of this report.

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

              Reports  of  Independent  Accountants,  Amisano & Hanson for years
              ended  December 31, 1998 and December 31, 1997 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: None
                  (c)      Exhibits

28

<PAGE>



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

10.1              West Gharib Egypt Joint Operating Agreement

                  West Gharib Block Operating/Technical Committee meeting March
                  1999 Resolution

10.2              West Gharib Block Operating/Technical Committee meting March
                  1999 Resolution

10.3              Farmout Agreement

10.4              Concession Agreement - West Gharib - To be filed by amendment.


29

<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.

DATE September 21, 1999                     DRUCKER INDUSTRIES, INC.


                                                /s/ Gerald Runolfson
                                            By: --------------------------------
                                                     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                  September 21, 1999
Gerald Runolfson                   and Director

/s/ Ernest Cheung
----------------------             Secretary                  September 21, 1999
Ernest Cheung                      and Director

/s/ Patrick Pak Ling Chan
----------------------             Director                   September 21, 1999
Patrick Pak Ling Chan

/s/ Joseph S. Tong
----------------------             Director                   September 21, 1999
Joseph S. Tong


30


<PAGE>

                            DRUCKER INDUSTRIES, INC.
                         (An Exploration Stage Company)

                  REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1998 and 1997

                            (Stated in U.S. dollars)



<PAGE>



                                AUDITORS' REPORT

To the Stockholders,
Drucker Industries, Inc.


We have audited the consolidated  balance sheets of Drucker Industries,  Inc. as
at December 31, 1998 and 1997 and the  statements of  operations,  stockholders'
equity  and cash  flows  for each of the years in the three  year  period  ended
December 31, 1998 and for the period from  inception of the  exploration  stage,
January  1, 1997 to  December  31,  1998.  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 consolidated  financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1998
and 1997 and the results of its  operations and cash flows for each of the years
in the three  year  period  ended  December  31,  1998 and for the  period  from
inception of the  exploration  stage,  January 1, 1997 to December 31, 1998,  in
accordance with generally accepted accounting principles in the United States.


Vancouver, Canada                                   /s/ Amisano Hanson
May 4, 1999                                         Chartered Accountants




<PAGE>

<TABLE>
<CAPTION>


                                              SEE ACCOMPANYING NOTES
                                             DRUCKER INDUSTRIES, INC.
                                          (An Exploration Stage Company)
                                            CONSOLIDATED BALANCE SHEETS
                                            December 31, 1998 and 1997
                                             (Stated in U.S. dollars)


                                                     ASSETS                        1998                 1997
                                                     ------                        ----                 ----
<S>                                                                          <C>                  <C>
Current
   Cash and term deposits - Note 3                                           $      2,763,628     $      3,238,576
   Accrued interest receivable                                                          5,483                    -
   Prepaid expenses                                                                     2,269                    -
   Advances receivable - Note 6                                                             -              250,709

Total current assets                                                                2,771,380            3,489,285
Oil and gas projects - Note 4                                                       1,262,106            1,275,217

                                                                             $      4,033,486     $      4,764,502

                                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current
   Accounts payable and accrued expenses - Note 6                            $         47,455     $         86,539
   Advance payable - Note 6                                                                 -               50,802

Total current liabilities                                                              47,455              137,341

Stockholders' Equity - Note 5
   Common stock $.001 par value, authorized 50,000,000 shares:
    32,476,250 shares issued and outstanding                                           32,115               32,115
Additional paid-in capital                                                          6,306,803            6,306,803
Deficit accumulated during the exploration stages                               (   2,352,887)       (   1,711,757)

Total stockholders' equity                                                          3,986,031            4,627,161

                                                                             $      4,033,486     $      4,764,502

</TABLE>


Nature and Continuance of Operations - Note 1
Commitment - Note 5
Subsequent Event - Note 10








APPROVED BY THE BOARD:

/s/ Gerry Runolfson                            /s/ Ernest Cheung
--------------------, Director                 ----------------- , Director
"Gerry Runolfson"                              "Ernest Cheung"



<PAGE>

<TABLE>
<CAPTION>


                                             DRUCKER INDUSTRIES, INC.
                                          (An Exploration Stage Company)
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                               for the years ended December 31, 1998, 1997 and 1996
                           and January 1, 1997 (Date of Inception of Exploration Stage)
                                               to December 31, 1998
                                             (Stated in U.S. dollars)


                                                                                                   January 1, 1997
                                                                                                      (Date of
                                                                                                    Inception of
                                                                                                     Exploration
                                                                                                      Stage) to
                                                           Year ended December 31,                  December 31,
                                             -----------------------------------------------------
                                                   1998              1997              1996             1998
                                                   ----              ----              ----             ----
<S>                                          <C>               <C>               <C>              <C>
Interest income                              $  (    157,538)  $  (    135,266)  $             -  $  (    292,804)

General and administrative expenses
 - Schedule 1                                        182,405           247,566             3,118          429,971

Fiscal agent fees                                          -             3,719                 -            3,719

Dry hole expenses - Schedule 2                        40,403           147,281                 -          187,684

Exploration expenses - Schedule 3                    575,860           286,514                 -          862,374

Net loss                                     $  (    641,130)  $  (    549,814)  $  (      3,118) $  (  1,190,944)

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

Weighted average shares outstanding               32,476,250        30,167,056        26,554,183

</TABLE>




<PAGE>

<TABLE>
<CAPTION>


                                              SEE ACCOMPANYING NOTES
                                                                                                      .../Continued
                                             DRUCKER INDUSTRIES, INC.
                                          (An Exploration Stage Company)
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                          for the years ended  December  31, 1989 to December 31, 1998
                         and  February 4, 1971 (Date of  Inception) to December 31, 1998
                                             (Stated in U.S. dollars)

                                                                                           Deficit
                                                                                           Additional   Accumulated
                                                                     Common Stock          Paid-in      During
                                                             Shares             Amount     Capital      Exploration 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 shares              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>


<PAGE>

<TABLE>
<CAPTION>


                                              SEE ACCOMPANYING NOTES
                                             DRUCKER INDUSTRIES, INC.
                                          (An Exploration Stage Company)
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                          for the years ended  December  31, 1989 to December 31, 1998
                             and  February 4, 1971 (Date of  Inception)  to December 31, 1998
                                             (Stated in U.S. dollars)


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


<PAGE>

<TABLE>
<CAPTION>


                                             DRUCKER INDUSTRIES, INC.
                                          (An Exploration Stage Company)
                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                          for the years ended  December  31, 1989 to December 31, 1998
                             and  February 4, 1971 (Date of  Inception)  to December 31, 1998
                                             (Stated in U.S. dollars)


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

Net loss for the year ended December 31, 1998                 -               -              -      (    641,130)       (   641,130)

Balance, December 31, 1998                           32,476,250      $   32,115     $6,306,803     $(  2,352,887)    $    3,986,031


</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                                       SEE ACCOMPANYING NOTES

                                                    DRUCKER INDUSTRIES, INC.
                                                 (An Exploration Stage Company)
                                              CONSOLIDATED  STATEMENTS  OF  CASH FLOW
                                       for the  years  ended  December  31, 1998, 1997 and 1996
                                     and January 1, 1997(Date of Inception of Exploration Stage)
                                                        to December 31, 1998
                                                      (Stated in U.S. dollars)
                                                                                                 January 1, 1997
                                                                                                    (Date of
                                                                                                    Inception
                                                                                                 of Exploration
                                                                                                    Stage) to
                                                          Year ended December 31                  December 31,
                                            ----------------------------------------------------
                                                  1998             1997              1996             1998
                                                  ----             ----              ----             ----
<S>                                         <C>              <C>               <C>              <C>
Cash flow from operating activities:
   Net loss                                 $ (     641,130) $ (     549,814)  $ (       3,118) $ (   1,190,944)
   Add items not affecting cash:
     Capital assets written-off                      40,288                -                 -           40,288
     Write-off of advances                           31,285                -                 -           31,285

                                              (     569,557)   (     549,814)    (       3,118)   (   1,119,371)
   Net changes in non-cash working capital items related to operations:
    Accrued interest receivable               (       5,483)               -                 -    (       5,483)
    Prepaid expenses                          (       2,269)               -                 -    (       2,269)
    Advances receivable                             250,709    (     250,709)                -                -
    Accounts payable and accrued
     expenses                                 (      39,084)          84,014            12,118           44,930

Net cash provided by (used in) operating
 activities                                   (     365,684)   (     716,509)            9,000    (   1,082,193)


Cash flow used in investing activity
   Oil and gas project costs                  (      58,462)   (   1,224,415)    (      50,802)   (   1,282,877)

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

Net cash provided by (used in )
 financing activities                         (      50,802)       5,179,500            41,802        5,128,698

Net increase (decrease) in cash               (     474,948)       3,238,576                 -        2,763,628
Cash, beginning of period                         3,238,576                -                 -                -

Cash and term deposits, end of period       $     2,763,628  $     3,238,576   $             -  $     2,763,628


</TABLE>

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



<PAGE>


<TABLE>
<CAPTION>

                                                                                   Schedule 1
                                                     SEE ACCOMPANYING NOTES

                                                   DRUCKER INDUSTRIES, INC.
                                                (An Exploration Stage Company)
                                CONSOLIDATED SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
                                   for the years  ended  December  31,  1998, 1997 and 1996
                                 and  January  1,  1997  (Date of Inception of Exploration Stage)
                                                      to December 31, 1998
                                                     (Stated in US Dollars)


                                                                                                   January 1, 1997
                                                                                                      (Date of
                                                                                                    Inception of
                                                                                                     Exploration
                                                                                                      Stage) to
                                                                                                    December 31,
                                                   1998              1997              1996             1998
                                                   ----              ----              ----             ----
<S>                                          <C>               <C>               <C>              <C>
Accounting and audit fees                    $        44,651   $         9,539   $         2,745  $        54,190
Advances written-off - Note 6                         24,061                 -             3,138           24,061
Consulting - Note 6                                   38,288            32,185                 -           70,473
Foreign exchange                                       1,111      (        778)     (      3,138)             333
Investor relations costs                               9,834            46,689                 -           56,523
Interest and bank charges                                619               406                 -            1,025
Legal                                                 12,104            59,795                 -           71,899
Office and general - Note 6                           29,957            46,576               373           76,533
Rent - Note 6                                          8,020             7,376                 -           15,396
Transfer agent fees                                    2,718                 -                 -            2,718
Travel                                                11,042            45,778                 -           56,820

                                             $       182,405   $       247,566   $         3,118  $       429,971


                                              SEE ACCOMPANYING NOTES

</TABLE>


<PAGE>

<TABLE>
<CAPTION>



                                                                                                         Schedule 2

                                                    DRUCKER INDUSTRIES, INC.
                                                 (An Exploration Stage Company)
                                           CONSOLIDATED  SCHEDULE  OF  DRY  HOLE
                                 EXPENSES for the years ended  December 31, 1998, 1997 and 1996
                                  and January 1, 1997 (Date of Inception of Exploration Stage)
                                                      to December 31, 1998
                                                     (Stated in US Dollars)


                                                                                                 January 1, 1997
                                                                                                    (Date of
                                                                                                  Inception of
                                                                                                   Exploration
                                                                                                   Stage) to,
                                                                                                   December 31
Fuxian Concession                                 1998             1997              1996             1998
-----------------                                 ----             ----              ----             ----
<S>                                         <C>              <C>               <C>              <C>
Administration                              $            -   $        3,484    $            -   $        3,484
Advances written-off                                31,285                -                 -           31,285
Amortization                                             -            2,827                 -            2,827
Audit                                                    -            1,875                 -            1,875
Capital assets written-off                           9,118                -                 -            9,118
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

                                            $       40,403   $      147,281    $            -   $      187,684


</TABLE>


SEE ACCOMPANYING NOTES

<PAGE>

<TABLE>
<CAPTION>




                                                                                                                      Schedule 3
                            DRUCKER INDUSTRIES, INC.
                         (An Exploration Stage Company)
                  CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
    for the years ended December 31, 1998, 1997 and 1996 and January 1, 1997
                  (Date of Inception of Exploration Stage) to
                                December 31, 1998
                             (Stated in US Dollars)
                                                                                                                 January 1, 1997
                                                                                                                 (Date of
                                                                                                                 Inception of
                                                                                                                 Exploration
                                                                                                                 Stage) to
                             Ningxia         Shaanxi       West        1998            1997            1996      December 31,
                            Concession     Concession     Gharib       Total           Total          Total         1998
                            ----------     ----------     ------       -----           -----          -----         ----
<S>                       <C>            <C>          <C>          <C>         <C>             <C>            <C>
Administration            $       2,590  $        -   $   37,939   $  40,529   $       6,173   $           -  $        46,702
Amortization                      7,509         392            -       7,901          10,141               -           18,042
Audit                             2,426       1,820            -       4,246           3,125               -            7,371
Consumables                           -           -       30,072      30,072               -               -           30,072
Drilling                              -           -          420         420               -               -              420
Entertainment                     3,147       1,605            -       4,752           7,469               -           12,221
Geological/geophysical                -           -      164,940     164,940               -               -          164,940
Insurance (rebate)           (    2,611)          -            -     ( 2,611)          5,256               -            2,645
Office Supplies                      41          23            -          64           5,690               -            5,754
Other                             1,439       1,798            -       3,237           3,072               -            6,309
Overhead                              -           -       14,602      14,602               -               -           14,602
Rent                              3,959       3,949            -       7,908             918               -            8,826
Repairs and maintenance             629           -            -         629           1,983               -            2,612
Surveying and testing           242,600           -            -     242,600         157,357               -          399,957
Telephone                         2,410         157            -       2,567           3,375               -            5,942
Travel                            1,380       3,288            -       4,668          48,005               -           52,673
Wages and benefits               26,617       2,729            -      29,346          33,950               -           63,296
Capital assets written-off       31,170           -            -      31,170               -               -           31,170
Interest income              (    7,614)          -            -     ( 7,614)              -               -     (      7,614)
Other income                 (    3,566)          -            -    (  3,566)              -               -     (      3,566)

                          $     312,126  $   15,761   $  247,973   $ 575,860    $    286,514   $           -  $       862,374


</TABLE>


<PAGE>




                            DRUCKER INDUSTRIES, INC.
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
              for the years ended December 31, 1998, 1997 and 1996
          and January 1, 1997 (Date of Inception of Exploration Stage)
                              to December 31, 1998
                            (Stated in U.S. dollars)


Note 1        Nature and Continuance of Operations

              The  company  currently  is in the  business  of  exploration  and
              development of oil and gas properties in China and Egypt.

              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.

              The company is in the  exploration  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  consolidated  financial  statements have been prepared on a
              going  concern  basis.  The company has  accumulated  a deficit of
              $2,352,887  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

              The  consolidated  financial  statements  of the company have been
              prepared  in  accordance   with  generally   accepted   accounting
              principles in the United States.  Because a precise  determination
              of many assets and  liabilities  is dependent  upon future events,
              the preparation of financial  statements for a period  necessarily
              involves the use of estimates  which have been made using  careful
              judgement. Actual results may vary from these estimates.

              The  consolidated   financial  statements  have,  in  management's
              opinion  been  properly   prepared  within  reasonable  limits  of
              materiality and within the framework of the significant accounting
              policies summarized below:

              Principles of Consolidation

              These  consolidated  financial  statements include the accounts of
              Drucker Industries, Inc. and its wholly-owned subsidiary,  Drucker
              Petroleum Inc.  ("DPI").  DPI was  incorporated by the company in
              the  British  Virgin  Islands  on  April  16,  1998 and  commenced
              operations  at  that  time.  All  inter-company  transactions have
              been eliminated.


<PAGE>




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

              Exploration Stage Company

              The  company  is  an  exploration  stage  company  as  defined  in
              Statement  of  Financial   Accounting  Standards  No.  7  and  the
              Securities  and  Exchange  Commission's  Exchange Act Guide 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 and  Egypt.  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,  1998,  the period in which the
              company has undertaken a new exploration stage activity.

              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  recognized 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.

              Capital Assets

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

              Environmental Costs

              Environmental  expenditures that relate to current  operations are
              expensed or capitalized as appropriate.  Expenditures  that relate
              to an existing  condition caused by past operations,  and which do
              not  contribute  to  current  or future  revenue  generation,  are
              expensed.  Liabilities are recorded when environmental assessments
              and/or  remedial  efforts  re  probable,   and  the  cost  can  be
              reasonably  estimated.  Generally,  the  timing of these  accruals
              coincides with the earlier of:

              i)   completion of a feasibility study;  or

              ii) the company's commitment to a plan of action based on the then
              known facts.

              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".


<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.

Note 3        Term Deposit

              At December  31,  1998,  included  in cash and term  deposits is a
              financing   deposit  of  $2,000,000  as  required  by  a  farm-out
              agreement  (Note 4).  This  deposit  is held as  collateral  for a
              letter of  guarantee.  The deposit will be used as payment for the
              costs incurred in exploring the concession located in West Gharib,
              Gulf of Suez, Egypt (Note 4).

Note 4        Oil and Gas Projects - Notes 6 and 10
              --------------------

<TABLE>
<CAPTION>

                                                                                          1998          1997
                                                             Ningxia       Shaanxi        Total         Total
<S>          <C>                                          <C>           <C>           <C>           <C>
             China Concessions
                  Project advance                         $    795,037  $     98,633  $    893,670  $  1,225,537
                  Capital assets                                     -         1,636         1,636        49,680

                                                          $    795,037  $    100,269       895,306     1,275,217

             West Gharib, Egypt Concession
               Acquisition costs
                  Cash                                                                     352,000             -
                  Project advance                                                           14,800             -

                                                                                      $  1,262,106  $  1,275,217

</TABLE>

              China Concessions

              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.


<PAGE>




Note 4        Oil and Gas Project Costs - Note 6 - (cont'd)
              -------------------------

              China Concessions - (cont'd)

              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.   During  the  year  ended  December  31,  1998,  this
              concession was abandoned.

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

              West Gharib Concession

              On April 27,  1998,  DPI  entered  into a  farm-out  agreement  to
              acquire an undivided  20%  participating  interest in the right to
              explore for and exploit petroleum in a concession  located in West
              Gharib, Gulf of Suez, Egypt.

              DPI shall pay:

              -   $352,000 within seven days of the  execution of the agreement
                  (paid)

              -   pay 20% of all costs and expenses  incurred  subsequent to the
                  execution of the agreement related to this concession.

              -   40% of the costs and expenses  associated with the drilling of
                  an  exploratory  well  to a  maximum  cost to the  company  of
                  $600,000;  thereafter,  DPI  shall  pay 20% of all  costs  and
                  expenses  associated with any further activity associated with
                  the concession.

              In addition,  DPI provided a bank  guarantee of $2,000,000  within
              seven  days of the  execution  of the  agreement,  being  40% of a
              letter of guarantee (Note 3).

              DPI's  interest in this oil and gas  concession is subject to a 7%
              net profit  interest  payable to a related company,  after DPI has
              recovered  all  of  its  exploration and development expenditures.
              This company is related by virtue of common directors.

Note 5        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,  1998,  5,179,500  share  purchase  warrants  are
              outstanding.  Each  warrant  entitles  the holder to purchase  one
              additional unit of the company at $0.40 per unit until the earlier
              of March  31,  2000 and the 90th day  after  the day on which  the
              weighted  average  trading  price of the  company's  shares exceed
              $0.90  per  share  for 10  consecutive  trading  days.  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 $0.60 per share. The
              additional  warrants will expire one year after the  occurrence of
              the exercise of the original warrant.


<PAGE>




Note 6        Related Party Transactions - Note 4
              --------------------------

              Advances receivable of $250,709 at December 31, 1997 were due from
              a company with a common director and were unsecured,  non-interest
              bearing and had no specific terms for repayment.

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

              Accounts  payable and accrued expenses  include $4,446  (1997:
              $55,338)  payable to a company with a common director.

              Advance  payable  of  $50,802 at  December  31,  1997 was due to a
              company  with a common  director and was  unsecured,  non-interest
              bearing and had no specific terms for repayment.

              During the year ended  December  31, 1998,  the company  wrote-off
              advances  to a related  company  in the  amount of  $24,061.  This
              company is related by virtue of a common director.

              The  company  was  charged  the  following  expenses  by a related
              company:

<TABLE>
<CAPTION>

                                                                                                 January 1, 1997
                                                                                                 (Date of Incep-
                                                                                                 tion of Explora-
                                                                                                  tion Stage) to
                                                                                                   December 31
                                                  1998             1997              1996              1998
                                                  ----             ----              ----              ----
<S>          <C>                            <C>              <C>               <C>               <C>
             Consulting                     $            -   $            -    $            -    $       36,000
             Office and general                     13,785                -                 -            13,795
             Rent                                    8,020                -                 -             8,020

                                            $       21,805   $            -    $            -    $       57,815

</TABLE>

              This company was related by virtue of common directors.

Note 7        Deferred Tax Assets

              The Financial  Accounting  Standards board issued Statement Number
              109 in Accounting  for Income Taxes ("FAS 109") which is effective
              for fiscal  years  beginning  after  December  15,  1992.  FAS 109
              requires the use of the asset and  liability  method of accounting
              of income taxes. Under the assets and liability method of FAS 109,
              deferred tax assets and  liabilities are recognized for the future
              tax consequences attributable to temporary differences between the
              financial  statements  carrying  amounts  of  existing  assets and
              liabilities and loss carryforwards and their respective tax bases.
              Deferred tax assets and liabilities are measured using enacted tax
              rates  expected  to apply to  taxable  income in the year in which
              those  temporary  differences  are  expected  to be  recovered  or
              settled.


<PAGE>




Note 7        Deferred Tax Assets - (cont'd)

              The following table  summarized the significant  components of the
              company's deferred tax assets:



                                                                         Total
             Deferred Tax Assets
             Net operating loss carryforward                     $    2,300,000
             Deferred tax assets                                 $    1,150,000
             Valuation allowance for deferred tax assets             (1,150,000)

                                                                 $            -


              The amount  taken into income as deferred  tax assets must reflect
              that portion of the income tax loss carryforwards  which is likely
              to be realized from future  operations.  The company has chosen to
              provide an allowance of 100% against all available income tax loss
              carryforwards, regardless of their time of expiry.

Note 8        Income Taxes

              No provision  for income taxes has been  provided in 1998 and 1997
              due to the net loss.  The  company  has net  operating  loss carry
              forwards,  which  expire  commencing  in the  year  2004  totaling
              approximately  $2,300,000,  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, 1998, the company will be subject to such limitation.
              The annual limitations have not been determined.

Note 9        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 exploration 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 10       Subsequent Event

              On April 15, 1999,  the company  abandoned the Ningxia oil and gas
              concessions.   In  this   regard,   the  company  paid  a  $33,000
              termination  fee and  received  $761,900 as a repayment of project
              advances outstanding at December 31, 1998.


<PAGE>




Note 11       Segmented Information

              The company's industry's segment is the oil and gas industry.  The
              company's geographic segments are Canada, China and Egypt.

<TABLE>
<CAPTION>

                                                                                       December 31, 1998
                                                 Canada            China             Egypt            Total
<S>          <C>                             <C>              <C>               <C>               <C>
             Identifiable Assets
               Current                       $   2,771,380    $           -     $           -     $   2,771,380
               Oil and gas projects                      -          895,306           366,800         1,262,106

                                             $   2,771,380    $     895,306     $     366,800     $   4,033,486

                                                                                       December 31, 1997
                                                 Canada            China             Egypt            Total
             Identifiable Assets
               Current                       $   3,489,285    $           -     $           -     $   3,489,285
               Oil and gas projects                      -        1,275,217                 -         1,275,217

                                             $   3,489,285    $   1,275,217     $           -     $   4,764,502


                                                                                    Year ended December 31,
                                                                                     1998              1997
             Operations
               Canada                                                           $ (    24,867)    $ (   116,019)
               China                                                              (   368,290)      (   433,795)
               Egypt                                                              (   247,973)                -

                                                                                $ (   641,130)    $ (   549,814)
</TABLE>


Note 12       New Accounting Standards

              In December 1997, the Accounting  Standards Board Issued statement
              3465,  "Income  Taxes",   which  establishes   standards  for  the
              recognition,  measurement,  presentation  and disclosure of income
              and refundable taxes. This statement is effective for fiscal years
              beginning on or after January 1, 2000. Adopting this standard will
              not  have  a  significant  impact  on the  company's  consolidated
              financial position, results of operations or cash flows.

              In April 1998, the Accounting Standards Executive Committee issued
              SOP 98-5,  "Reporting on the costs of start-up  activities".  This
              statement is effective for fiscal years  beginning  after December
              15,  1998.  Adopting  this  standard  will not have a  significant
              impact on the company's consolidated  financial position,  results
              of operations or cash flows.

              In June 1998, the Financial Accounting Standards board issued SFAS
              No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
              Activities,"  which  standardized  the  accounting  for derivative
              instruments.  SFAS is  effective  for all fiscal  quarters  of all
              fiscal years beginning after June 15, 1999. Adopting this standard
              will not have a significant  impact on the company's  consolidated
              financial positions, results of operations or cash flows.

<PAGE>


Note 13       Uncertainty Due to the Year 2000 Issue

              The Year 2000 Issue arises because many  computerized  systems use
              two digits  rather  than four to identify a year.  Date  sensitive
              systems  may  recognize  the year 2000 as 1900 or some other date,
              resulting in errors when  information  using the year 2000 date is
              processed. In addition, similar problems may arise in some systems
              which use certain dates in 1999 to represent  something other than
              a date.  The  effects  of the Year 2000  Issue may be  experienced
              before,  on, or after  January 1, 2000 and if not  addressed,  the
              impact on operations and financial  reporting may range from minor
              errors to  significant  system  failure  which  could  affect  the
              company's ability to conduct normal business operations. It is not
              possible  to be  certain  that all  aspects of the Year 2000 Issue
              affecting the company,  including  those related to the efforts of
              customers,  suppliers  or  other  third  parties,  will  be  fully
              resolved.

Note 14       Comparative Figures

              Certain  of  the  prior  year's  comparative   figures  have  been
              reclassed  to conform  with the  presentation  used in the current
              year.