<PAGE>


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                         COMMISSION FILE NUMBER 1-13463

                               BPK RESOURCES, INC.
          -------------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

                NEVADA                                   88-0426887
------------------------------------------     ------------------------------
   (State or other jurisdiction of          (IRS Employer Identification Number)
    Incorporation of organization)

      5858 WESTHEIMER STREET, SUITE
          709, HOUSTON, TX                                 77057
------------------------------------------      -----------------------------
  (Address of Principal Executive Offices)              (Zip Code)

                                 (713) 978-7991
   --------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

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

        Title of Each Class                Name of Exchange on which Registered
        -------------------                ------------------------------------
Common Stock, $0.001 par value per share                      None

         Securities registered under Section 12(g) of the Exchange Act:
                                      None

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Exchange  Act during the  preceding 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.

Yes  _X_   No____

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

         State issuer's revenues for its most recent fiscal year: $160,967.


<PAGE>


         The  aggregate  market  value  of the  voting  common  equity  held  by
non-affiliates  of  the  registrant  based  on the  closing  sale  price  of the
registrant' common stock as reported on the OTC Bulletin Board on April 10, 2003
was  $6,055,223.  The  information  provided  shall in no way be construed as an
admission  that any person whose  holdings  are  excluded  from the figure is an
affiliate or that any person whose holdings are included in the figure is not an
affiliate, and any such admission is hereby disclaimed. The information provided
is solely  for the  record  keeping  purposes  of the  Securities  and  Exchange
Commission.

         As of April 10,  2003,  14,417,198  shares of the  registrant's  common
stock were outstanding.

         Transitional Small Business Disclosure Formats (check one):

         Yes ___   No _X_


                       DOCUMENTS INCORPORATED BY REFERENCE

         None.



<PAGE>



                    PRIVATE SECURITIES LITIGATION REFORM ACT

                  The information contained in this Annual Report on Form 10-KSB
and in other public  statements by the Company and Company officers or directors
includes or may contain  certain  forward-looking  statements.  The words "may,"
"will," "expect,"  "anticipate,"  "believe," "continue,"  "estimate," "project,"
"intend," and similar  expressions  used in this Report are intended to identify
forward-looking  statements  within  the  meaning  of  Section  27A of the  U.S.
Securities Act of 1933 and Section 21E of the U.S.  Securities Exchange of 1934.
You should not place undue reliance on these forward-looking  statements,  which
speak only as of the date made. We undertake no  obligation to publicly  release
the result of any revision of these forward-looking statements to reflect events
or  circumstances  after the date they are made or to reflect the  occurrence of
unanticipated  events.  You  should  also  know  that  such  statements  are not
guarantees of future  performance  and are subject to risks,  uncertainties  and
assumptions.  Many of these  risks and  uncertainties  are set  forth  under the
caption  "RISK  FACTORS" in Item I of this Report.  Should any of these risks or
uncertainties  materialize,  or should any of our assumptions  prove  incorrect,
actual  results  may  differ   materially   from  those   included   within  the
forward-looking statements.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

         BPK Resources,  Inc.,  formerly known as Bepariko  Biocom,  is a Nevada
corporation  formed on April 2, 1997. Our offices are located at 5858 Westheimer
Street, Suite 709, Houston,  Texas 77057. Unless the context otherwise requires,
references to the "Company",  "BPK",  "we",  "us" or "our",  mean BPK Resources,
Inc. or any of our consolidated subsidiaries.

         We were formerly  engaged in the business of security  system  services
and products and were the  exclusive  licensee of  worldwide  patent  rights for
electronic multiple fingerprint  recognition procedures and systems. On November
19, 2001, we  experienced  a change in management  when all of our directors and
officers  resigned  from their  positions  and new officers and  directors  were
appointed. In April 2002, our new management implemented a new business plan and
we became  engaged in the  business  of  acquiring,  exploring,  and  developing
domestic  natural gas and oil properties.  In order to more clearly identify our
company as a participant  in the oil and gas industry,  we changed our name from
Bepariko Biocom to BPK Resources,  Inc. at our annual meeting of stockholders on
October 11, 2002.

GENERAL
         We are in the oil and gas  exploration  and  development  business.  We
target  high-potential oil and gas assets primarily in the Texas,  Louisiana and
other  traditional oil producing states in the southwestern  United States.  Our
operations  are  focused  on   exploration   activities  to  find  and  evaluate
prospective oil and gas properties and providing capital to participate in these
projects.  We  participate  in  projects  directly,   through  our  consolidated
subsidiaries, and as equity participants in limited partnerships.


                                       1
<PAGE>

         We are  generally not involved as the operator of the projects in which
we participate.  Instead, we rely on third parties for drilling,  delivering any
gas or oil reserves that are discovered,  and assisting us in the negotiation of
all sales  contracts with such purchasing  parties.  With the assistance of such
third  parties,  we plan to explore and develop these  prospects and sell on the
open market any gas or oil that we  discover.  We rely on  Touchstone  Resources
USA,  Inc. to assist and advise us regarding the  identification  and leasing of
properties on favorable terms. We also rely upon Touchstone  Resources USA, Inc.
to  provide us with  additional  reserve  assessment  analysis  and  engineering
services in connection  with the  exploration  and development of our prospects.
Touchstone  Resources  USA,  Inc.  has a  significant  level  of  experience  in
exploring  and  developing  gas and oil  properties  in the  regions  where  our
prospects are located. This strategy is intended to reduce the level of overhead
and capital expenditures required to maintain drilling and production operations

         Our  strategy  also  includes  selling all or part of our  interests in
various  partnerships  or all or part of  leasehold  interests we own to realize
immediate  proceeds  and limit or  eliminate  future risk  associated  with such
projects.

         To date all of our  revenues  have been derived from our share of sales
of oil and gas reserves in our various projects.

PROJECTS AND SUBSIDIARIES

     On  April  22,  2002,  we  acquired two units in Touchstone Resources- 2001
Hackberry Drilling Fund, LP (the "Touchstone Partnership") and received a 10.26%
partnership interest. The Touchstone Partnership owns an approximate 75% working
interest  in  the  South  China  Prospect  and  the South French Prospect in the
Hackberry  Trend  located  in  Jefferson  County,  Texas  (the "Jefferson County
Prospects").  Touchstone  Resources Ventures, LLC, serves as the general partner
of  the  Touchstone  Partnership.

         On April 26, 2002, we  increased  our  interest in the Jefferson County
Prospects  by  acquiring  an  approximate  6.25%  gross  working interest in the
Jefferson  County  Prospects  from  Vitel  Ventures  Corporation.

         On July 31, 2002,  we further  increased  our interest in the Jefferson
County Prospects when we entered into a limited  partnership  agreement with PHT
Gas, LLC to form CSR-Hackberry  Partners,  L.P. ("CSR"). We are the sole limited
partner with a 99%  interest in CSR. PHT Gas, LLC serves as the general  partner
of CSR. CSR owns an approximate  12.5% working  interest in the Jefferson County
Prospects.  Any  distribution of profits of CSR are allocated 99% to the limited
partners and 1% to the general  partner  until all capital has been  returned to
the partners.  Thereafter,  such  distributions are allocated 50% to the limited
partners and 50% to the general partner.

         In the aggregate, we have an approximate 24.55% working interest in the
Jefferson County Prospects.  Touchstone  Resources Ventures,  LLC is responsible
for  oversight  and  coordination  of  the  development  and  management  of the
Jefferson County  Prospects in conjunction with Touchstone  Resources USA, Inc.,
the operator of the Jefferson County Prospects.


                                       2
<PAGE>

         On July 17, 2002, we acquired a 32.5% limited  partnership  interest in
PH  Gas,  L.P.  PH  Gas, L.P. owns approximately 10% of the membership shares in
APICO,  LLC.  APICO, LLC's primary business is to farm-in certain concessions in
the Phu Horm Gas Field Project located in the Kingdom of Thailand and controlled
by  Amerada  Hess  (Thailand)  Limited  (the  "Thailand Prospect"). PHT Gas, LLC
serves  as  the general partner. APICO, LLC plans to acquire additional property
interests  and  other  rights  in these concessions, to participate in exploring
these  concessions,  and  to  develop  and  operate  oil  and gas wells in these
concessions.  Distribution  of  any profits of PH Gas, L.P. are allocated 99% to
the  limited  partners  and 1% to the general partner until all capital has been
returned  to  the  partners. Thereafter, such distributions are allocated 80% to
the  limited  partners  and  20%  to  the  general  partners.

         On August 14, 2002, we increased our interest in the Thailand  Prospect
by  acquiring a 4.1% limited partnership interest in PHT Partners, L.P. PHT Gas,
LLC  serves as the general partner of PHT Partners, L.P. PHT Partners, L.P. owns
approximately  20%  of  the membership shares of APICO, LLC. Distribution of any
profits  of  PHT Partners, L.P. are allocated 99% to the limited partners and 1%
to  the  general  partner  until  all capital has been returned to the partners.
Thereafter, such distributions are allocated 80% to the limited partners and 20%
to  the  general  partner.

         PH Gas,  L.P. and PHT  Partners,  L.P. are subject to capital  calls in
connection with their  investment in APICO.  We are likewise  subject to capital
calls as a limited partner of PHT Partners.  If either of these  partnerships or
the Company do not meet their respective  capital calls, we may lose all or part
of our interest in the Thailand Prospect.

         On October 17, 2002,  we entered into a limited  partnership  agreement
with PHT Gas, LLC to form  BPK-South  Valentine  Partners,  L.P. We are the sole
limited partner with a 99% interest in BPK-South  Valentine  Partners.  PHT Gas,
LLC serves as the general  partner of BPK-South  Valentine  Partners.  BPK South
Valentine purchased a 16.66% interest in South Valentine  Partners,  L.P., which
was drilling a well in the Valentine field in Lafourche  Parish,  Louisiana (the
"Lafourche  Parish's  Prospect").  The well was a dry hole.  Distribution of any
profits of BPK South Valentine  Partners,  L.P. are allocated 99% to the limited
partners and 1% to the general  partner  until all capital has been  returned to
the partners.  Thereafter,  such  distributions are allocated 80% to the limited
partners and 20% to the general  partner.  The Company is not subject to capital
calls in connection with its limited partnership interest in BPK South Valentine
Partners.

         On December 31, 2002, we purchased a 9.4% limited partnership  interest
in Louisiana Shelf Partners,  L.P., a Delaware limited  partnership  ("Louisiana
Shelf"),  for which LS Gas, LLC serves as the general  partner.  Louisiana Shelf
owns a leasehold  interest in 1,130.02  acres in East  Cameron  Block 4, Cameron
Parrish,  Louisiana  and certain  seismic data  related  thereto in offshore oil
fields (the "Cameron Parrish Prospects").  Louisiana Coastal, Inc. serves as the
operator of this project.  Distribution of any profits of Louisiana Shelf,  L.P.
are  allocated 99% to the limited  partners and 1% to the general  partner until
all capital has been returned to the partners.  Thereafter,  such  distributions
are allocated 60% to the limited partners and 40% to the general partner. We are
subject  to  capital  calls  to meet  the  reasonable  capital  requirements  of
Louisiana Shelf.


                                       3
<PAGE>

         On January 15, 2003, we purchased a 99% limited partnership interest in
CSR-WAHA  Partners,  L.P., a Delaware  limited  partnership,  for which CSR, LLC
serves as the general partner. We are the sole limited partner of CSR-WAHA which
owns a 12.5% working interest in 3,037 acres in the  Waha/Lockridge  oil and gas
prospect  located  in Reeves  County  Texas  (the  "Reeves  County  Prospects").
Distribution of any profits of CSR are allocated 99% to the limited partners and
1% to the general  partner  until all capital has been returned to the partners.
Thereafter, such distributions are allocated 80% to the limited partners and 20%
to the general partners.  CSR-WAHA is a party to a Joint Operating Agreement for
which Timbre-Sharp serves as the operator.

DRILLING, EXPLORATION AND PRODUCTION ACTIVITIES

         Following is a discussion of our significant drilling,  exploration and
production activities.

Jefferson County Prospects
--------------------------

         Our Jefferson County Prospects  consist of working  interests in three
Hackberry Trend wells in Jefferson County, Texas. The C.G. Hooks-State No. 1 was
put on production in March 2002 and is classified as an oil well, the Melton No.
1 was put on production in October 2002 and is classified as a gas well, and the
J.F.  Gaulding No. 2, is classified as an oil well and has been producing  since
1977.

         The  following  table sets  forth  certain  information  about our well
activities in Jefferson County, Texas, subsequent to December 31, 2001.

Well Name                           Working Interest          Current Status
--------------------------------------------------------------------------------
Melton No. 1                        27.65114%                   Producing
C.G. Hooks-State No. 1              21.40114%                   Producing
J.F. Gaulding No. 2                 2.834488%                   Producing

Thailand Prospect
-----------------

         Through our  various  limited  partnerships  we own a  percentage  of a
farm-in  agreement  with  Amerada  Hess-Thailand Limited. The farm-in acreage is
located on the Khorat Plateau, Thailand. The initial well drilled on the acreage
was  not  capable  of  production.  The  following  table  sets  forth  certain
information about our well activities on the Khorat Plateau, Thailand subsequent
to  December  31,  2001.

Well Name                   Working Interest          Current Status
-------------------------------------------------------------------------------
Phu Horm 3                        2.028%               temporarily abandoned

         In April,  2003,  Apico, LLC began to redrill the acreage  utilizing an
underbalanced drilling program. Apico, LLC expects to reach total depth and test
in May, 2003.  Depending upon the results of the completion of this well, we may
drill additional wells in this area in 2003.


                                       4
<PAGE>

Cameron Parish Prospects
------------------------

     Louisiana  Shelf  owns  leasehold  interests consisting of 1130.02 acres in
East  Cameron  Block  4,  along  with  certain  seismic  data.  The leasehold is
considered  to  contain  multiple  targets  in  the  form of primary shallow and
secondary  deep  reserves  located  in  offshore fields. The first well for West
Cameron  Block  17 has been permitted. The well is expected to reach total depth
and  test  in  May,  2003.

Lafourche Parish Prospect
-------------------------

     Our  subsidiary, BPK-South Valentine Partners, L.P., owns a 16.66% interest
in  South  Valentine  Partners,  L.P., which is drilling a well in the Valentine
field in Lafourche Parish, Louisiana. The Delores Guidroz No. 1 was drilled to a
total  depth  of  10,868  feet subsurface. It was not capable of production. The
following  table  sets  forth  certain  information about our well activities in
Lafourche  Parish,  Louisiana,  subsequent  to  December  31,  2001.

Well Name                           Working Interest          Current Status
--------------------------------------------------------------------------------
Deloros Guidroz No. 1                     16.5%                   Dry

Reeves County Prospect
----------------------

         CSR-Waha Partners,  L.P. holds a 12.5% interest in leasehold acreage in
Reeves County,  Texas. During April, 2003, the drilling of the Ligon State 22-1H
well was  completed.  The Ligon State 22-5  continues to produce in a de minimus
fashion.  The  following  table sets forth  certain  information  about our well
activities in Reeves County, Texas, subsequent to December 31, 2001.

Well Name                           Working Interest          Current Status
--------------------------------------------------------------------------------
Ligon State 22-1H                   12.375%                   Producing
Ligon State 22-2                    12.375%                   Shut In
Ligon State 22-3                    12.375%                   Shut In
Ligon State 22-5                    12.375%                   Producing




                                       5
<PAGE>

COMPETITION

         The petroleum and natural gas industry is highly competitive.  Numerous
independent oil and gas companies,  oil and gas syndicates and major oil and gas
companies  actively  seek out and bid for oil and gas  properties as well as for
the services of third party providers, such as drilling companies, upon which we
rely. A substantial  number of our competitors have longer  operating  histories
and substantially  greater financial and personnel resources than we do. Many of
these companies not only explore for,  produce and market  petroleum and natural
gas, but also carry out refining operations and market the resultant products on
a worldwide basis. Such larger or vertically integrated  competitors may be in a
position to outbid us for particular prospect rights.

         The  petroleum  and  natural  gas  producers  also  compete  with other
suppliers of energy and fuel to industrial, commercial and individual customers.
Competitive  conditions may be substantially affected by various forms of energy
legislation  and/or  regulation  considered  from time to time by the government
(and/or  agencies  thereof)  of the United  States and other  factors out of our
control including,  international political conditions, overall levels of supply
and demand for oil and gas, and the markets for synthetic  fuels and alternative
energy sources.

REGULATION

         The  exploration,  production  and sale of oil and gas are  extensively
regulated at both the federal and state levels.  Applicable legislation is under
constant review for amendment or expansion.  These efforts  frequently result in
an  increase  in  the  regulatory  burden  on  companies  in  our  industry  and
consequently  a  increase  in  the  cost  of  doing  business  and  decrease  in
profitability.   Numerous  federal  and  state   departments  and  agencies  are
authorized to, and have issued rules and regulations imposing additional burdens
on the oil and gas  industry  that  often are  costly  to comply  with and carry
substantial penalties for failure to comply.  Production operations are affected
by changing tax and other laws relating to the petroleum industry, by constantly
changing administrative regulations and possible interruptions or termination by
government authorities.

         Oil and gas mineral rights may be held by  individuals or  corporations
and, in certain circumstances,  by governments having jurisdiction over the area
in which such mineral  rights are located.  As a general rule,  parties  holding
such mineral  rights grant licenses or leases to third parties to facilitate the
exploration and development of these mineral rights. The terms of the leases and
licenses   are   generally    established   to   require   timely   development.
Notwithstanding   the  ownership  of  mineral  rights,  the  government  of  the
jurisdiction  in which mineral rights are located  generally  retains  authority
over the manner of development of those rights.

         State regulatory  authorities  have  established  rules and regulations
requiring permits for drilling operations, drilling bonds and reports concerning
operations.  The  states  in which we  operate  have  statutes  and  regulations
governing  various  environmental  and  conservation   matters,   including  the
unitization or pooling of oil and gas properties  and  establishment  of maximum
rates of production from oil and gas wells. Many states also restrict production
to the market demand for oil and gas. Such  statutes and  regulations  may limit
the rate at which oil and gas could otherwise be produced from our properties.


                                       6
<PAGE>

         In addition to royalties paid to feehold  owners,  each state generally
imposes a production  or severance  tax with respect to  production  and sale of
crude  oil,  natural  gas  and  natural  gas  liquids  within  their  respective
jurisdictions.  For the most  part,  state  production  taxes are  applied  as a
percentage of production or sales.

ENVIRONMENTAL

         Our  operations  are also subject to a variety of  constantly  changing
federal,  state,  local and  international  laws and  regulations  governing the
discharge  of  materials  into  the   environment   or  otherwise   relating  to
environmental protection. Significant fines and penalties may be imposed for the
failure to comply with  environmental  laws and regulations.  Some environmental
laws provide for joint and several strict  liability for remediation of releases
of hazardous  substances,  rendering a person  liable for  environmental  damage
without  regard to negligence or fault on the part of such person.  In addition,
we may be subject to claims  alleging  personal  injury or property  damage as a
result of alleged exposure to hazardous substances,  such as oil and gas related
products or for other reasons.

         Some  environmental  protection  laws and  regulations may expose us to
liability  arising  out of the conduct of  operations  or  conditions  caused by
others,  or for acts which were in compliance  with all  applicable  laws at the
time the acts were performed. Changes in the environmental laws and regulations,
or  claims  for  damages  to  persons,   property,   natural  resources  or  the
environment, could result in substantial costs and liabilities to us. These laws
and  regulations  may   substantially   increase  the  cost  of  exploring  for,
developing,  producing  or  processing  oil and gas and may prevent or delay the
commencement  or continuation of a given project and thus generally could have a
material adverse effect upon our capital expenditures,  earnings, or competitive
position.  We  believe  that  we  are in  substantial  compliance  with  current
applicable  environmental laws and regulations,  and the cost of compliance with
such  laws and  regulations  has not been  material  and is not  expected  to be
material  during  the  next  fiscal  year.  Nevertheless,  changes  in  existing
environmental laws and regulations or in the interpretations  thereof could have
a significant impact on the oil and gas industry in general.

         The United States Oil  Pollution  Act of 1990 ("OPA `90"),  and similar
legislation enacted in Texas, Louisiana and other coastal states,  addresses oil
spill prevention and control and significantly expands liability exposure across
all segments of the oil and gas industry.  OPA `90 and such similar  legislation
and related  regulations  impose on us a variety of  obligations  related to the
prevention of oil spills and liability for damages  resulting  from such spills.
OPA `90 imposes strict and, with limited exceptions, joint and several liability
upon each responsible  party for oil removal costs and a variety of other public
and private damages.

         The Comprehensive Environmental Response,  Compensation,  and Liability
Act ("CERCLA") imposes liability, without regard to fault or the legality of the
original  conduct,  on certain  classes of persons that are  considered  to have
contributed  to the release of a  "hazardous  substance"  into the  environment.
These  persons  include the owner or operator of the  disposal  site or the site
where the release  occurred  and  companies  that  disposed or arranged  for the
disposal of the  hazardous  substances  at the site where the release  occurred.
Under CERCLA, such persons may be subject to joint and several liability for the
costs of cleaning up the hazardous  substances  that have been released into the
environment  and for damages to natural  resources,  and it is not  uncommon for



                                       7
<PAGE>

neighboring  landowners  and other  third  parties to file  claims for  personal
injury and property damage allegedly caused by the hazardous substances released
into the  environment or for other  reasons.  Although we do not we serve as the
operator of any of our projects, if the operators of our projects fail to comply
with applicable  environmental  regulations  may, in certain  circumstances,  be
attributed to us

         State  water   discharge   regulations   and  federal  waste  discharge
permitting  requirements adopted pursuant to the Federal Water Pollution Control
Act prohibit or are expected in the future to prohibit the discharge of produced
water and sand and some other  substances  related to the oil and gas  industry,
into coastal waters. Although the costs to comply with such mandates under state
or federal law may be significant,  the entire industry will experience  similar
costs,  and we do not  believe  that these  costs  will have a material  adverse
impact on our financial condition and operations.

OPERATIONAL HAZARDS AND INSURANCE

         Our  operations  are  subject to  particular  hazards  incident  to the
drilling and production of oil and gas, such as blowouts, cratering, explosions,
uncontrollable  flows of oil, gas or well fluids,  fires and pollution and other
environmental  risks.  These hazards can cause personal injury and loss of life,
severe  damage  to  a  destruction  of  property  and  equipment,  pollution  or
environmental damage and suspension of operation.

         We are not an operator of oil and gas  properties.  In the  projects in
which we own a  non-operating  interest  directly or own an equity interest in a
limited  partnership which owns a non-operating  interest,  the operator for the
prospect  maintains  insurance  of various  types to cover our  operations  with
policy limits and retention liability customary in the industry.  We believe the
coverage and types of insurance  are adequate.  The  occurrence of a significant
adverse event, the risks of which are not fully covered by insurance, could have
a material  adverse  effect on our  ownership  interests  and thereby  financial
condition and results of operations.

EMPLOYEES AND CONSULTANTS

         We currently  have one employee who serves as our  President  and Chief
Executive Officer. We utilize the services of approximately five (5) consultants
who provide,  among other things,  technical support and accounting  services to
the Company. We do anticipate retaining additional personnel during 2003.

                                  RISK FACTORS

         The  following  material risk  factors,  among  others,  may affect the
Company's financial condition and results of operations.

         ACQUIRING  INTERESTS IN  PROPERTIES TO EXPLOIT THE NATURAL GAS RESERVES
OF SUCH  PROPERTIES  IS  SPECULATIVE  IN NATURE  AND MAY NOT EVER  RESULT IN ANY
OPERATING REVENUES OR PROFITS.



                                       8
<PAGE>

         There is no assurance  that we will  discover oil and gas in commercial
quantities  in any of our current  properties  or  properties  we acquire in the
future.  Our success  depends  upon our  ability to acquire  working and revenue
interests  in  properties  upon  which  gas  and  oil  reserves  are  ultimately
discovered.  We do not have an  established  history of locating and  developing
properties  that have gas and oil reserves.  We expect to ultimately  derive the
cash flow  necessary to fund our  operations  from the oil and gas produced from
our leased properties and/or the sale of our leased  properties.  As of the date
of this  report,  none  of our  leased  properties  have  generated  significant
operating  revenues  and we have  not sold any of our  interests  in our  leased
properties.

         OUR ABILITY TO PRODUCE  SUFFICIENT  QUANTITIES  OF OIL AND GAS FROM OUR
PROPERTIES  MAY BE  ADVERSELY  AFFECTED  BY A NUMBER OF  FACTORS  OUTSIDE OF OUR
CONTROL.  IF WE ARE UNABLE TO PRODUCE  OIL  AND/OR  GAS FROM OUR  PROPERTIES  IN
COMMERCIAL QUANTITIES, OUR OPERATIONS WILL BE SEVERELY AFFECTED.

         Our  business of  exploring  for and  producing  oil and gas involves a
substantial  risk of investment  loss.  Drilling oil and gas wells  involves the
risk that the wells may be unproductive  or that,  although  productive,  do not
produce oil and/or gas in economic quantities. Other hazards, such as unusual or
unexpected  geological  formations,   pressures,   fires,   blowouts,   loss  of
circulation of drilling fluids or other  conditions may  substantially  delay or
prevent  completion  of any well.  Adverse  weather  conditions  can also hinder
drilling  operations.  A productive well may become uneconomic if water or other
deleterious  substances are encountered,  which impair or prevent the production
of oil and/or gas from the well.  In addition,  production  from any well may be
unmarketable if it is impregnated with water or other deleterious substances. As
with any petroleum property,  there can be no assurance that oil and gas will be
produced  from the  properties  in which we have  interests.  In  addition,  the
marketability of oil and gas which may be acquired or discovered, is affected by
numerous  factors  beyond our control.  These factors  include the proximity and
capacity of oil and gas pipelines and processing equipment,  market fluctuations
of prices, taxes, royalties, land tenure, allowable production and environmental
protection.  We cannot  predict how these  factors have  adversely  affected our
business.

         OUR  OPERATIONS  ARE  EXTREMELY  DEPENDENT ON OTHER COMPANIES AND OTHER
SERVICE PROVIDERS OVER WHICH WE HAVE NO CONTROL.

         The success of our business is almost entirely dependent on the efforts
of various  third  parties  which we do not control.  For example,  we rely upon
various companies,  such as Touchstone  Resources USA, Inc., the Chief Executive
Officer and Executive Vice  President of which is on our board of directors,  to
assist us in identifying  desirable gas and oil prospects to acquire and provide
us with  technical  assistance  and services.  We also rely upon the services of
geologists,  geophysicists,  chemists, engineers and other scientists to explore
and analyze our  prospects to determine a method in which the  prospects  may be
developed in a cost-effective  manner. In addition,  we rely upon the owners and
operators of oil rigs and drilling  equipment to drill and develop our prospects
to production.  Although we have developed  relationships with a number of third
party service  providers,  we can not assure that we will be able to continue to


                                       9
<PAGE>

rely on such  persons.  If any of these  relationships  with third party service
providers are  terminated or are  unavailable on terms that are favorable to us,
then we will not be able to execute our business plan.

         IN THE EVENT WE ARE UNABLE TO IDENTIFY ADDITIONAL GAS AND OIL PROSPECTS
IN WHICH WE CAN ACQUIRE AN INTEREST AT AN AFFORDABLE  PRICE,  WE MAY NOT BE ABLE
TO SUSTAIN OUR CURRENT GROWTH RATE AND SPREAD RISK.

         One  element of our  strategy  is to  continue  to grow and spread risk
through selected  acquisitions of leasehold or other ownership  interests in gas
and oil prospects.  If we are unable to execute this aspect of our strategy in a
timely  manner,  we may not be able to limit our risks and our operations may be
adversely affected. We can not assure you that:

o    we will be able to identify  desirable  gas and oil  prospects  and acquire
     leasehold or other  ownership  interests  in such  prospects at a desirable
     price;
o    any  completed,  currently  planned,  or future  acquisitions  of ownership
     interests  in gas and oil  prospects  will include  prospects  that contain
     proven gas or oil reserves;
o    we will have the  ability to develop  prospects  which  contain  proven oil
     reserves to the point of production;
o    we will have the financial ability to consummate additional acquisitions of
     ownership  interests in gas and oil  prospects or to develop the  prospects
     which we acquire to the point of production; or
o    that we will be able to consummate  such  additional  acquisitions on terms
     favorable to us.


         MARKET FLUCTUATIONS IN THE PRICES OF OIL AND GAS COULD ADVERSELY AFFECT
THE  PRICE  AT  WHICH  WE CAN  SELL  ANY  GAS OR OIL  DISCOVERED  ON OUR  LEASED
PROPERTIES.

         Market  fluctuations in the prices of oil and gas can adversely  effect
the price that we can sell gas and oil discovered on our leased  properties.  In
recent  decades,  there have been periods of both worldwide over  production and
underproduction of hydrocarbons and periods of both increased and relaxed energy
conservation efforts. These conditions have resulted in periods of excess supply
of, and reduced demand for,  crude oil on a worldwide  basis and for natural gas
on a domestic basis. These periods have been followed by periods of short supply
of, and increased  demand for, crude oil and, to a lesser  extent,  natural gas.
The excess or short  supply of gas and crude oil has placed  pressures on prices
and has resulted in dramatic price  fluctuations,  even during  relatively short
periods  of  seasonal  market  demand.  We  cannot  predict  with any  degree of
certainty  future oil and  natural  gas  prices.  Changes in oil and natural gas
prices significantly affect our revenues,  operating results,  profitability and
the value of our oil and gas reserves. We do not currently engage in any hedging
program to mitigate our exposure to fluctuation in oil and gas prices.

         IF WE ARE UNABLE TO GENERATE ADDITIONAL FINANCING,  WE WILL NOT BE ABLE
TO ADEQUATELY FUND OUR EXISTING  DEVELOPMENT AND EXPLORATION PROJECTS OR ACQUIRE
ADDITIONAL OIL AND GAS INTERESTS.


                                       10
<PAGE>

         We do not have an  adequate  amount  of cash on hand or  other  working
capital  resources to adequately fund our development and exploration  projects.
In the past,  we have  relied on the sale of our debt and equity  securities  to
fund the acquisition,  exploration and development of our petroleum  properties.
In order to  continue  funding  these  projects  and to have the ability to fund
additional projects,  we will need to raise additional capital. We cannot assure
you  that  additional  funding  will  be  available  to us for  exploration  and
development of our projects or to fulfill our obligations  under any agreements.
We also cannot assure you that we will be able to generate sufficient  operating
cash flow or obtain  adequate  financing  in the future or that the terms of any
such financing will be favorable.  Failure to generate such additional operating
cash  flow  or  obtain  such   additional   financing  could  result  in  delay,
postponement  or  cancellation  of further  exploration  and  development of our
projects with the possible loss of such properties.

         IF THE OPERATOR OF A PROSPECT IN WHICH WE PARTICIPATE DOES NOT MAINTAIN
OR FAILS TO OBTAIN  ADEQUATE  INSURANCE,  OUR INTEREST IN SUCH PROSPECT COULD BE
MATERIALLY AND ADVERSELY AFFECTED.

         Oil and gas  operations are subject to particular  hazards  incident to
the  drilling  and  production  of oil and  gas,  such as  blowouts,  cratering,
explosions, uncontrollable flows of oil, gas or well fluids, fires and pollution
and other environmental  risks. These hazards can cause personal injury and loss
of life,  severe damage to and destruction of property and equipment,  pollution
or environmental damage and suspension of operation.

         We are not an operator of oil and gas  properties.  In the  projects in
which we own a  non-operating  interest  directly or own an equity interest in a
limited  partnership which owns a non-operating  interest,  the operator for the
prospect  maintains  insurance  of various  types to cover our  operations  with
policy limits and retention liability customary in the industry.  We believe the
coverage and types of insurance  are adequate.  The  occurrence of a significant
adverse event which is not fully covered by insurance,  could result in the loss
of our total  investment  in a particular  prospect  which could have a material
adverse effect on our financial condition and results of operations.

         WE DO NOT  RETAIN  LEGAL  COUNSEL TO  EXAMINE  TITLE.  WE DEPEND ON THE
JUDGMENT OF OIL AND GAS LEASE  BROKERS AND THE OPERATORS OF WELLS TO ENSURE THAT
THERE ARE NO MATERIAL  TITLE  DEFICIENCIES  IN THE  PROPERTIES  WE LEASE.  TITLE
DEFICIENCIES  COULD RENDER A LEASE WORTHLESS WHICH WOULD HAVE A MATERIAL ADVERSE
AFFECT ON OUR BUSINESS AND OPERATIONS.

         We  purchase  working and revenue  interests  in oil and gas  leasehold
interests.  The  existence  of a material  title  deficiency  can render a lease
worthless and can result in a large expense to our business.  It is our practice
in acquiring oil and gas leases or undivided interests in oil and gas leases not
to undergo the expense of retaining  lawyers to examine the title to the mineral
interest to be placed under lease or already placed under lease. Rather, we rely
upon the judgment of oil and gas lease  brokers or landmen who perform the field
work  in  examining  records  in  the  appropriate  governmental  office  before
attempting to place under lease a specific mineral  interest.  This is customary
practice in the oil and gas  industry.  Prior to the  drilling of an oil and gas
well,  however,  it is the normal  practice in the oil and gas  industry for the
person or company  acting as the  operator  of the well to obtain a  preliminary
title  review of the spacing  unit within which the proposed oil and gas well is




                                       11
<PAGE>

to be drilled to ensure there are no obvious  deficiencies in title to the well.
We do not anticipate that we, or the person or company acting as operator of the
wells located on the properties which we intend to lease, will obtain counsel to
examine  title to such  spacing  unit until the well is about to be drilled.  As
result of such  examinations,  certain curative work may have to be performed to
correct  deficiencies in the  marketability of the title, and such curative work
entails  expense.  The work might  include  obtaining  affidavits of heirship or
causing an estate to be  administered.  It does happen,  from time to time, that
the examination  made by the title lawyers reveals that the oil and gas lease or
leases are  worthless,  having been  purchased in error from a person who is not
the owner of the mineral interest  desired.  In such instances,  the amount paid
for such oil and gas lease or leases is generally  lost.  If we were to lose the
amount  paid for any such oil and gas  lease,  such loss  would  have a material
adverse  effect on our business.  Since we do not intend to retain title lawyers
in connection with our  acquisitions,  the risk of such losses in our operations
is increased.

         THE OIL AND GAS EXPLORATION  INDUSTRY IS EXTREMELY  COMPETITIVE,  WHICH
MAY ADVERSELY AFFECT OUR PROFITABILITY.

         The oil and gas industry is intensely  competitive  and we compete with
other companies which have longer operating  histories and greater financial and
other  resources  than we do. Many of these  companies  not only explore for and
produce  crude oil and  natural gas but also carry on  refining  operations  and
market petroleum and other products on a worldwide basis.  These competitors can
sustain  longer  periods of reduced prices of gas and oil and have the resources
to actively reduce prices to force us out of the market.  These  competitors may
also be in a better  position to outbid us to purchase a particular  interest in
oil and gas  properties.  We cannot  assure  you that we will have the supply of
energy and fuel to industrial, commercial and individual customers.

         OUR  FAILURE TO COMPLY  WITH  STRICT  ENVIRONMENTAL  REGULATIONS  COULD
RESULT IN  SIGNIFICANT  FINES AND/OR  PENALTIES AND OUR COST OF COMPLIANCE  WITH
SUCH REGULATIONS COULD RESULT IN LARGE EXPENSES, EITHER OF WHICH WOULD ADVERSELY
AFFECT OUR OPERATIONS.

         Our  operations are subject to a variety of federal,  state,  local and
international laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. Significant fines
and penalties may be imposed for the failure to comply with  environmental  laws
and regulations.  Some  environmental  laws provide for joint and several strict
liability  for  remediation  of releases of  hazardous  substances,  rendering a
person liable for environmental  damage without regard to negligence or fault on
the part of such  person.  In  addition,  we may be subject  to claims  alleging
personal injury or property damage as a result of alleged  exposure to hazardous
substances such as oil and gas related products.

         Some  environmental  protection  laws and  regulations may expose us to
liability  arising  out of the conduct of  operations  or  conditions  caused by
others,  or for acts which were in compliance  with all  applicable  laws at the
time the acts were performed. Changes in the environmental laws and regulations,
or  claims  for  damages  to  persons,   property,   natural  resources  or  the
environment, could result in substantial costs and liabilities to us. Therefore,



                                       12
<PAGE>

there  can be no  assurance  that we will not  incur  significant  environmental
compliance costs in the future.

         OUR FAILURE TO COMPLY WITH VARIOUS LEVELS OF  GOVERNMENTAL  REGULATIONS
TO WHICH WE ARE SUBJECT COULD RESULT IN SIGNIFICANT  FINES AND/OR  PENALTIES AND
OUR COST OF COMPLIANCE  WITH SUCH  REGULATIONS  COULD RESULT IN LARGE  EXPENSES,
EITHER OF WHICH WOULD ADVERSELY AFFECT OUR OPERATIONS.

         Oil and gas  exploration,  development  and  production  are subject to
various types of regulation by local,  state and federal  agencies.  Legislation
affecting  the oil and gas industry is under  constant  review for amendment and
expansion.  Also, numerous departments and agencies, both federal and state, are
authorized by statute to issue and have issued rules and regulations  binding on
the  oil and gas  industry  and its  individual  members,  some of  which  carry
substantial  penalties for failure to comply.  The regulatory  burden on the oil
and gas  industry  increases  our  cost of  doing  business  and,  consequently,
adversely affects its profitability.

         WE HAVE HAD  OPERATING  LOSSES AND LIMITED  REVENUES TO DATE AND DO NOT
EXPECT TO BE PROFITABLE IN THE FORESEEABLE FUTURE.

         We have been operating at a loss each year since our inception,  and we
expect to  continue  to incur  substantial  losses for at least the  foreseeable
future. Net loss applicable to common  stockholders for the years ended December
31, 2002 and 2001 were  approximately  $1,326,007  and  $553,505,  respectively.
Through  December  31,  2002,  we had an  accumulated  deficit of  approximately
$1,921,000.  We also have limited revenues to date. Revenues for the years ended
December 31, 2002 and 2001 were $160,967 and $0,  respectively.  Further, we may
not be able to generate  significant  revenues in the future.  In  addition,  we
expect to incur  substantial  operating  expenses in connection with our gas and
oil  exploration  activities.  As a result,  we expect to continue to experience
negative cash flow for at least the foreseeable  future and cannot predict when,
or even if, we might become profitable.

         WE OWE APPROXIMATELY  $3,650,000 TO THIRD PARTIES;  IF WE ARE UNABLE TO
SATISFY THIS INDEBTEDNESS, OUR BUSINESS WILL BE ADVERSELY AFFECTED.

         As of the date of this report,  we had indebtedness to third parties in
the  aggregate amount of approximately $3,650,000. This indebtedness consists of
promissory  notes  in the aggregate principal amount of approximately $1,500,000
held  by  Trident Growth Fund, L.P. These promissory notes mature on October 31,
2003  and  are secured by substantially all of our assets. The remainder of this
indebtedness  consists  of  a  $1,500,000  note  payable to Continental Southern
Resources,  Inc.  due  April  30,  2003  and  demand  promissory  notes  in  the
outstanding  principal amount of $650,000. The presence of this indebtedness may
have  a  negative  effect  on  our  ability  to  obtain additional financing. In
addition,  if  we  do  not  have adequate funds on hand at the maturity dates of
these  notes,  then  we  will  require significant additional funding. We cannot
assure  you  that  alternative  financing  will be available to us on acceptable
terms,  if  at  all.

                                       13
<PAGE>

         OUR EXISTING STOCKHOLDERS WILL EXPERIENCE SUBSTANTIAL DILUTION OF THEIR
OWNERSHIP  INTERESTS  DUE TO THE  ISSUANCE  OF  ADDITIONAL  SHARES OF OUR COMMON
STOCK.

         We are  currently  authorized  to issue  100,000,000  shares  of common
stock, of which  14,417,198  shares were outstanding as of April 10, 2003. As of
April 10, 2003, we had issued and outstanding warrants,  convertible  promissory
notes and  convertible  preferred  stock  convertible  into 9,097,072  shares of
common stock. Some of these securities  contain  anti-dilution  provisions which
will result in the issuance of additional shares in the event we sell additional
shares of our  common  stock at a price less than $.55 per  share.  Issuance  of
these shares of common stock will substantially  dilute the ownership  interests
of our existing  stockholders.  The potential issuance of such additional shares
of common stock may create downward  pressure on the trading price of our common
stock which in turn, will require us to issue  additional  shares to raise funds
through  sales of our  securities.  We may also issue  additional  shares of our
common stock in connection  with the hiring of personnel,  future  acquisitions,
future private placements of our securities for capital raising purposes, or for
other business purposes.  This will further dilute the interests of our existing
holders.

         WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

         We have never  declared  or paid a dividend  on our  common  stock.  We
intend to retain earnings, if any, for use in the operation and expansion of our
business  and,  therefore,  do  not  anticipate  paying  any  dividends  in  the
foreseeable future.

         THERE IS NO SIGNIFICANT TRADING MARKET FOR OUR COMMON STOCK.

         Our  common  stock is not  eligible  for  trading  on any  national  or
regional  securities  exchange or the Nasdaq Stock  Market.  Our common stock is
eligible  for  trading  in the OTC  Bulletin  Board.  This  market  tends  to be
substantially  more illiquid than  national  securities  exchanges or the Nasdaq
Stock Market. There is not an active trading market for our common stock. We are
not certain that an active trading  market in our common stock will develop,  or
if such a market develops, that it will be sustained.

         APPLICABLE SEC RULES GOVERNING THE TRADING OF "PENNY STOCKS" LIMITS THE
TRADING AND  LIQUIDITY OF OUR COMMON STOCK WHICH MAY AFFECT THE TRADING PRICE OF
OUR COMMON STOCK.

         Our common stock currently trades on the OTC Bulletin Board.  Since our
common  stock  continues  to trade  below $5.00 per share,  our common  stock is
considered  a "penny  stock" and is subject to SEC rules and  regulations  which
impose  limitations  upon the manner in which our shares can be publicly traded.
These  regulations  require the delivery,  prior to any transaction  involving a
penny stock, of a disclosure  schedule explaining the penny stock market and the
associated risks.  Under these  regulations,  certain brokers who recommend such
securities to persons  other than  established  customers or certain  accredited
investors  must  make  a  special  written  suitability  determination  for  the
purchaser and receive the purchaser's  written  agreement to a transaction prior
to sale.  These  regulations have the effect of limiting the trading activity of
our common  stock and  reducing the  liquidity  of an  investment  in our common
stock.

                                       14
<PAGE>

         THE TRADING PRICE OF OUR COMMON STOCK MAY BE VOLATILE.

         The trading price of our shares has from time to time fluctuated widely
and in the future may be subject to similar fluctuations.  The trading price may
be affected by a number of factors  including the risk factors set forth in this
Report as well as our operating results,  financial condition,  announcements or
drilling  activities,  general  conditions  in  the  oil and gas exploration and
development  industry,  and other events or factors. IN addition, we have agreed
to file a registration statement to permit the public resale of shares of common
stock  issuable  to Trident upon conversion of its convertible note and warrants
and  certain other of our outstanding securities. The influx of such substantial
number of shares into the public market could have a significant negative effect
on  the  trading  price  of our common stock. In recent years broad stock market
indices,  in  general, and smaller capitalization companies, in particular, have
experienced  substantial  price  fluctuations.  In  a  volatile  market,  we may
experience  wide  fluctuations  in  the  market price of our common stock. These
fluctuations  may  have  an extremely negative effect on the market price of our
common  stock.

ITEM 2. DESCRIPTION OF PROPERTY

OFFICE

         Our operational  offices are located at 5858 Westheimer  Street,  Suite
709,  Houston,  Texas 77057. We rent 1,000 square feet of office space at a rate
of  $1,500  per  month.  We  believe  our  current  office  is  adequate for the
foreseeable  future.

OIL AND GAS PROPERTIES

         The following is a description of working and revenue  interests  which
we own as of December 31, 2002.

         Our properties consist primarily of oil and gas wells and our ownership
in leasehold acreage,  both developed and undeveloped.  At December 31, 2002, we
had interests in 3 gross  (.51886768  net) oil and gas wells and owned leasehold
interests in 59,874.84 gross (1,689.20 net) undeveloped acres.

Reserves
--------

         The following  table sets forth certain  information as of December 31,
2002 with respect to our estimated proved oil and gas reserves, present value of
proved reserves and standardized measure of discounted future net cash flows.

Area -  Jefferson County, Texas

Gross Oil Production (MBbls)        79.943
Gross Gas Production (MMcf)         499.253
Net Oil Production (MBbls)          5.902
Net Gas Production (MMcf)           40.918
Future Net Cashflow (M$)            218.658
Discounted Cashflow (M$)            206.606

         The  estimates of proved  reserves at December 31, 2002 and the present



                                       15
<PAGE>

value of proved  reserves were derived from reports  prepared by D. Chris Barden
and Associates,  independent  petroleum engineers.  Estimated recoverable proved
reserves have been  determined  without  regard to any economic  impact that may
result from our hedging  activities.  These  calculations  were  prepared  using
standard  geological and engineering methods generally accepted by the petroleum
industry and in accordance  with  Securities and Exchange  Commission  financial
accounting  and  reporting  standards.  The  estimated  present  value of proved
reserves  does  not  give  effect  to  indirect  expenses  such as  general  and
administrative  expenses,  debt  service  and future  income  tax  expense or to
depletion, depreciation and amortization.

         In  accordance  with  applicable  financial  accounting  and  reporting
standards of the SEC, the estimates of our proved reserves and the present value
of proved  reserves  set forth  herein are made  using oil and gas sales  prices
estimated to be in effect as of the date of such reserve  estimates and are held
constant throughout the life of the properties.  Estimated  quantities of proved
reserves and their  present value are affected by changes in oil and gas prices.
The prices  utilized for the purposes of estimating our proved  reserves and the
present value of proved  reserves as of December 31, 2002 were $25.00 per Bbl of
oil and natural gas liquids and $3.50 per Mcf of gas.

         There are numerous  uncertainties  inherent in estimating quantities of
proved oil and natural gas reserves and their present  value,  and in projecting
future rates of production  and timing of  development  expenditures,  including
many factors  beyond our control.  The reserve  information  shown is estimated.
Reserve   engineering  is  a  subjective   process  of  estimating   underground
accumulations  of oil and gas that cannot be measured  in an exact  manner.  The
accuracy of any reserve estimate is a function of the quality of available data,
the precision of the engineering and geological interpretation, and judgment. As
a result,  estimates  of  different  engineers  often  vary.  The  estimates  of
reserves,  future cash flows and present value are based on various assumptions,
including  those  prescribed by the SEC, and are  inherently  imprecise.  Actual
future  production,  cash  flows,  taxes,  development  expenditures,  operating
expenses and  quantities  of  recoverable  oil and natural gas reserves may vary
substantially  from these estimates.  Also, the use of a 10% discount factor for
reporting purposes may not necessarily  represent the most appropriate  discount
factor,  given actual  interest rates and risks to which our business or the oil
and natural gas industry in general are subject.

         Since January  1,2002,  we have not filed an estimate of our net proved
oil and gas reserves with any federal authority or agency other than the SEC.

Exploration and Development Activities
--------------------------------------

     We  drilled,  or participated in the drilling of, three wells in the period
from  January  1,  2002  through  December  31, 2002. Of these, one well was not
capable  of  oil  or  gas  production  and  two  were  completed as a producers.

     The  information  contained  in  the  foregoing  statement  should  not  be
considered  indicative  of future drilling performance, nor should it be assumed
that  there  is any necessary correlation between the number of productive wells
drilled  and  the  amount of oil and gas that may ultimately be recovered by us.


                                       16
<PAGE>

         We do not own any drilling rigs, and all of our drilling activities are
conducted by independent drilling contractors.

Productive Well Summary

         The  following  table  sets forth  certain  information  regarding  our
ownership, as of December 31, 2002, of productive wells and acreage in the areas
indicated.

Wells
-----

Area                        Oil                Gas                  Total
-------------------------------------------------------------------------------
Jefferson County, Texas    2 gross            1 gross               3 gross
                           .24235628 net      .2765114 net         .51886768 net

Acreage
--------

Area                        Oil                Gas                 Total
-------------------------------------------------------------------------------
Jefferson County, Texas    302.19 gross       98.868 gross        401.078 gross
                           34.965 net         27.286 net          62.249 net

Production Volumes and Costs for 2002
-------------------------------------

Oil and Gas Production Data                          Gross          Net
--------------------------------------------------------------------------------
         Oil (Bbls)                                  47,024       4,807.01
         Gas (Mcf)                                   134,574      30,396.62

Average Sales Price
-------------------
         Oil (Bbl)         $24.76
         Gas (Mcf)         $3.39

Cost per unit ($)
-------------------
         Oil ($/Bbl)       2.21
         Gas ($/Mcf)       .19


Undeveloped Acreage
-------------------

         The  following  table  sets forth  certain  information  regarding  our
undeveloped  leasehold  acreage as of December 31, 2002 in the areas  indicated.
This table excludes  options to acquire leases and acreage in which our interest
is limited to royalty, overriding royalty and similar interests.

Area                                Gross              Net
-----                                ------           -----
Jefferson County, Texas             790.66           314.0523


                                       17
<PAGE>

South Louisiana
         Lafourche Parish           640              106.624
         Cameron Parish             1130.02          106.278
Khorat Plateau                      57314.84         1162.248

         The undeveloped  leasehold in the Jefferson County,  Texas area expires
during 2003 in the absence of production.  The undeveloped  leasehold in Cameron
Parish,  Louisiana  area expires in December 2005 in the absence of  production.
The  undeveloped  leasehold  in the  Khorat  Plateau,  Thailand  area is held by
production of the Phu Horm No. 1 well.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not a party to any material  pending legal  proceeding
nor is it aware of any proceeding  contemplated  by any  governmental  authority
involving the Company.

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

         None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's  common stock currently  trades on the OTC Bulletin Board
under the symbol  "BPKR".  The following  table sets forth the range of high and
low bid prices per share of the Company's  common stock for each of the calendar
quarters  identified  below  as  reported  by  the  OTC  Bulletin  Board.  These
quotations represent  inter-dealer prices,  without retail mark-up,  markdown or
commission,  and may not  represent  actual  transactions.  The prices set forth
below have been adjusted to reflect a two for one stock split effective December
30, 2002 effectuated by way of a stock dividend.

          2002:                                  HIGH             LOW
          ----                                   ----             ---

         Quarter ended December 31, 2002        $ .70           $ .50
         Quarter ended September 30, 2002        1.15             .47
         Quarter ended June 30, 2002             1.20             .60
         Quarter ended March 31, 2002            1.38             .30

          2001:                                  HIGH             LOW
          ----                                   ----             ---

         Quarter ended December 31, 2001        $1.50           $ .30
         Quarter ended September 30, 2001        1.62             .30
         Quarter ended June 30, 2001             2.72            1.38
         Quarter ended March 31, 2001            2.75             .53



                                       18
<PAGE>

        The last price of the  Company's  common  stock as  reported on the OTC
Bulletin Board on April 10, 2003 was $.42 per share.

HOLDERS

         As of April  10,  2003 the  number  of  stockholders  of  record of the
Company's  common stock was 49. Based on broker inquiry  conducted in connection
with the  distribution  of proxy  solicitation  materials in connection with the
Company's  special meeting of  shareholders  in 2002, the Company  believes that
there are approximately 160 beneficial owners of its common stock.

DIVIDENDS

         The  Company  has not  paid  any cash  dividends  to  date,  and has no
intention of paying any cash  dividends  on our common stock in the  foreseeable
future. The declaration and payment of dividends is subject to the discretion of
the Company's Board of Directors and to certain limitations imposed under Nevada
corporate  laws. The timing,  amount and form of dividends,  if any, will depend
on,  among  other  things,  the  Company's  results  of  operations,   financial
condition,  cash requirements and other factors deemed relevant by the Company's
Board of Directors.

RECENT SALES OF UNREGISTERED SECURITIES

The recent sales described in paragraphs 1 through 4 were completed prior to the
Company's  two  for one stock split and have not been adjusted to give effect to
the  split.

     1. In October and  November,  2002,  the  Company  issued an  aggregate  of
257,264  shares of common stock to a limited number of accredited investors at a
purchase  price  of  $1.10  per  share  raising  gross proceeds of $311,300. The
Company  paid  a  finder's  fee in the amount of $25,000 in connection with this
offering.  The shares were issued in a private placement transaction exempt from
the  registration  requirements  of  the  Securities  Act  of  1933, as amended,
pursuant  to  Section  4(2)  thereof  and  Rule  506 of Regulation D promulgated
thereunder.

     2. On December 1, 2002,  the Company  issued an option to purchase  100,000
shares of common  stock at an  exercise  price of $1.20 per share,  the  closing
market price on the date of grant, to Monaco Capital &  Communications,  Inc., a
European  investor  relations  firm. The option is immediately  exercisable  and
terminates  on  December 1, 2003.  The option was issued in a private  placement
transaction  exempt from the registration  requirements of the Securities Act of
1933,  as  amended,  pursuant to Section  4(2)  thereunder,  without  payment of
underwriting discounts or commissions to any person.

     3. In November  and  December of 2002,  the Company  issued an aggregate of
351,335 Units to a limited number of accredited investors at a purchase price of
$1.20  per  Unit  raising gross proceeds of $421,600. Each Unit consisted of one
(1)  share  of  common  stock  and  a warrant to purchase an additional share of
common  stock  at  an exercise price of $1.20 per share for a three year period.
The Company paid a finder's fee in the amount of $35,000 in connection with this
offering.  The  Units were issued in a private placement transaction exempt from
the  registration  requirements  of  the  Securities  Act  of  1933, as amended,
pursuant  to  Section  4(2)  thereof  and  Rule  506 of Regulation D promulgated
thereunder.


                                       19
<PAGE>

     4. On December 5, 2002,  the Company  issued 550,000 shares of common stock
to  Paul  DeJoria  at  a  purchase  price of $605,000 ($1.10 per share) of which
$300,000  was paid at closing and the remainder payable pursuant to a promissory
note  which was paid on January 20, 2003. The Company paid a finder's fee in the
amount  of $60,500 in connection with this offering. The shares were issued in a
private  placement  transaction exempt from the registration requirements of the
Securities  Act  of  1933,  as  amended,  pursuant  to  Section  4(2)  thereof.


     5. On January 15, 2003,  the Company  issued 600,000 shares of common stock
to  Continental  Southern  Resources,  Inc.  in  partial  consideration  for the
purchase of a 99% limited  partnership  interest in CSR-WAHA Partners,  L.P. The
shares  were  issued  in  a  private  placement   transaction  exempt  from  the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof without payment of underwriting discounts or commissions to
any person.

     6. On January 31,  2003,  the Company  issued  options to purchase  100,000
shares of common stock at an exercise price of $.65 per share to each of Mark A.
Bush  and Wes  Franklin  in  connection  with  their  appointments  to  serve as
Directors  of the  Company.  The options are fully  vested and  terminate on the
earlier  of three (3) years  from the date of grant or three  (3)  months  after
cessation  of service  to the  Company.  The  options  were  issued in a private
placement   transaction  exempt  from  the  registration   requirements  of  the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder, without
payment of underwriting discounts or commissions to any person.

     7. On January 30,  2003,  the Company  issued  options to purchase  200,000
shares  of  common  stock at an  exercise  price  of $.65  per  share to John B.
Connally,  III, the Chief Executive  Officer and a Director of the Company.  The
options  are fully  vested.  The options  terminate  on the earlier of three (3)
years from the date of grant or three (3) months  after  cessation of service to
the Company.  The options were issued in a private placement  transaction exempt
from the  registration  requirements  of the Securities Act of 1933, as amended,
pursuant to Section 4(2) thereunder,  without payment of underwriting  discounts
or commissions to any person.

     8. On March 4,  2003,  the  Company  issued  5,538,461  shares of its newly
designated  Series A 10%  Convertible  Preferred  Stock (the "Series A Preferred
Shares") to Ocean Resources  Capital  Holdings PLC ("ORCH"),  a London,  England
based company whose shares are traded on the  Alternative  Investment  Market of
the London Stock Exchange. The shares were issued in consideration of receipt of
4,390,000  ordinary  shares of ORCH  together with warrants to purchase up to an
additional  1,450,000  ordinary  shares of ORCH at an exercise  price of 75p per
share and an additional  1,430,000  ordinary shares of ORCH at an exercise price
of 100p per share. The Series A Preferred Shares are immediately  convertible at
the option of the holder into one share of Company  common  stock,  subject to a
cap which prohibits conversion to the extent that conversion would result in the
holder  beneficially  owning  in excess  of 4.99% of the  Company's  outstanding
shares.  The Company  has the option to redeem all Series A Preferred  Shares at
any time by  payment  of an amount per share  equal  $.65 plus all  accrued  and
unpaid  dividends  paid  thereon  and is  required  to redeem all such shares by
payment of such amount no later than  February  28,  2006.  The  Company  paid a
consulting fee consisting of warrants to purchase 400,000 shares of common stock
in connection with this offering.  See paragraph 9 below. The shares were issued


                                       20
<PAGE>

in a private placement transaction exempt from the registration  requirements of
the  Securities  Act of 1933, as amended,  pursuant to Section 4(2)  promulgated
thereunder.

     9. On March 4, 2003, the Company issued options to purchase  400,000 shares
of common stock at an exercise price of $.65 per share to Rhodes Ventures, S.A.,
a  London  based  financial   consulting   firm.  The  options  are  immediately
exercisable  and terminate  three (3) years from the date of grant.  The options
were issued in a private  placement  transaction  exempt  from the  registration
requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2)
thereunder,  without  payment of  underwriting  discounts or  commissions to any
person.

     10. On March 23,  2003,  the Company  issued  warrants  to purchase  25,000
shares of common stock at an exercise  price of $.55 per share to Trident Growth
Fund, L.P., a principal  stockholder of the Company.  The options were issued in
consideration of Trident's  waiving certain covenants set forth in the Company's
outstanding   $1,500,000  principal  amount  convertible  promissory  note.  The
warrants are immediately  exercisable and terminate April 30, 2012. The warrants
were issued in a private  placement  transaction  exempt  from the  registration
requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2)
thereunder,  without  payment of  underwriting  discounts or  commissions to any
person.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

     This  Management's  Discussion  and Analysis and other parts of this Report
contain  forward-looking  statements  that  involve risks and uncertainties. All
forward-looking  statements  included  in  this  Report are based on information
available  to  the  Company  on  the  date  hereof,  and  the Company assumes no
obligation  to  update any such forward-looking statements. The Company's actual
results  could differ materially from those anticipated in these forward-looking
statements  as a result of a number of factors, including those set forth in the
Section  captioned  "RISK  FACTORS"  in Item 1 and elsewhere in this Report. The
following should be read in conjunction with the audited financial statements of
the  Company  and  the  related  notes  included  elsewhere  herein.

OVERVIEW

         We are in the business of acquiring,  exploring and developing  natural
gas and oil properties. We have directly, through our consolidated subsidiaries,
and  through  equity  interests  in  limited  partnerships,  acquired  leasehold
interests in  prospects in Texas,  Louisiana  and  Thailand.  In the next twelve
months,  we intend to  acquire  additional  ownership  interests  in  properties
located  in Texas as well as  other  traditional  oil  producing  states  in the
southwestern  United States.  With the  assistance of various third parties,  we
plan to explore and develop these  prospects and sell on the open market any gas
or oil that we discover.

         We rely on Touchstone  Resources USA, Inc., the Chief Executive Officer
and Executive Vice  President of which sit on our board of directors,  to assist
and  advise us  regarding  the  identification  and  leasing  of  properties  on
favorable terms. We also rely upon Touchstone  Resources USA, Inc. to provide us
with  additional  reserve  assessment  analysis  and  engineering   services  in
connection with the  exploration  and  development of our prospects.  Touchstone
Resources  USA,  Inc. has a  significant  level of  experience  in exploring and
developing  gas and oil  properties  in the  regions  where  our  prospects  are

                                       21
<PAGE>

located.  We will also rely upon various third  parties who will be  responsible
for drilling  wells,  delivering  any gas or oil reserves  which are  discovered
through pipelines to the ultimate purchasers and assisting us in the negotiation
of all sales contracts with such purchasing parties.

         We intend to play an active role in evaluating prospects, and providing
financial and other management  functions with respect to the operations at each
of our properties.  As we intend to subcontract the performance of substantially
all of the physical operations at our properties, we do not anticipate incurring
a substantial amount of expenses related to the purchase of plant,  machinery or
equipment in connection  with the exploration and development of our properties.
Similarly,  we do not  anticipate  any  substantial  increase  in the  number of
persons which we employ.

         In April 1997, we were granted worldwide patent rights,  pursuant to an
Exclusive   Worldwide   Licensing   Agreement,   covering   electronic  multiple
fingerprint  recognition  system.  Since  the  date of the  Exclusive  Worldwide
Licensing  Agreement,  we have unsuccessfully  attempted to exploit these patent
rights.  While we still  hold these  patent  rights,  we are no longer  devoting
substantial efforts to the exploitation of these patent rights and are currently
soliciting  offers to sell or assign these  rights.  We plan to use any proceeds
received  from the  sale or  assignment  of these  rights  for  working  capital
purposes and to purchase  additional  leasehold interests in natural gas and oil
properties.

BUSINESS STRATEGY

            Our strategy is to develop reserves and generate revenue through the
exploration  and development of our existing  prospects in Louisiana,  Texas and
Thailand and the selective  acquisition of additional  properties  both offshore
and onshore in Texas,  Louisiana and other  traditional oil producing  states in
the southwestern  United States.  Our strategy also includes selling all or part
of our  interests  in certain of our  partnerships  or all or part of  leasehold
interests  we own to  realize  immediate  capital  gains and limit or  eliminate
future risk  associated  with such projects.  As of the date of this report,  we
have not sold any such interests.

            We intend to execute our strategy by focusing on the following:

               o    High potential exploratory drilling
               o    Opportunistic   acquisitions  with  additional   exploratory
                    and/or development potential

            High  Potential   Exploratory  Drilling  in  Louisiana,   Texas  and
            --------------------------------------------------------------------
Thailand.  During  2002,  operators  at  our  Jefferson  County  Prospects  have
--------
completed the drilling of two exploratory  wells, both of which are currently in
production and beginning to generate revenue. Operators at our Jefferson County,
Thailand,  Reeves  County and Louisiana  Prospects  are  currently  drilling one
exploratory well and plan to drill five additional  exploratory wells during the
remainder  of  2003.  We  believe  we have  assembled  a ten year  inventory  of
exploration and development drilling opportunities in Texas and Louisiana.

            Opportunistic Acquisitions. Although our primary strategy is to grow
            --------------------------
our reserves through drilling,  we anticipate making opportunistic  acquisitions


                                       22
<PAGE>

in Texas, Louisiana and other southwestern states with exploratory potential and
in core areas of operation with exploitation and development potential.

     We may increase or decrease our planned activities for 2003, depending upon
drilling  results,  product  prices,  the availability of capital resources, and
other  factors  affecting  the  economic viability of such activities. We do not
attempt  to  forecast  our  potential  success  rate  on  exploratory  drilling.

RESULTS OF OPERATIONS

FISCAL YEAR  ENDED DECEMBER 31, 2002 AS COMPARED TO FISCAL YEAR ENDED DECEMBER
31,  2001

Revenues

     We generated $160,967 of revenue during the fiscal year ended December 31,
2002 consisting of oil and gas revenues from our net revenue interest in the
Hackberry Prospect located in Jefferson County, Texas ("Hackberry Prospect").
We did not generate any revenue during the corresponding period in 2001.

Operating Expenses

     Production Expenses were $81,642, depletion and amortization expenses were
$381,229 and dry hole and impaired properties expenses were $146,838 during the
fiscal year ended December 31, 2002.  We did not incur any operating expenses
during the fiscal year ended December 31, 2001 as we did not generate any
revenue during such period.  The increase in production expense of $81,642 was
due to the expenses incurred from the working interest in the Hackberry
Prospect. The increase in depletion and amortization expenses was due to the
depletion of the Hackberry Prospect based on the units produced.  The dry hole
and impaired properties expense was due to BPK Valentine Partners, L.P., our
subsidiary, drilling a well which was a dry hole.

General and Administrative Expenses

     General and administrative expenses increased $185,508 to $411,278 during
the fiscal year ended December 31, 2002 as compared to $225,770 for the fiscal
year ended December 31, 2001.  The increase was primarily due to an in increase
in consulting expense and professional fees.

Other (income) and expense

     Other (income) and expense increased  $138,252 to $465,987 during the
fiscal year ended December 31, 2002 as compared to $327,735 for the fiscal year
ended December 31, 2001.  The increase was primarily due to an increase in
interest expense of $106,697 as a result of issuance of debt and a $68,053
partnership investment loss associated with the Company's investment in
Touchstone Resources - 2001 Hackberry Drilling Fund, L.P.  This amount was
offset by $36,498 of interest income, approximately $33,000 of which was
realized in connection with the conversion of the $250,000 principal amount of
notes receivable issued by Global Genomics Capital, Inc. ("GGC") and $2,301 of
interest receivable on the $50,000 principal amount demand note issued by
Pawnxchange, Inc.


LIQUIDITY AND CAPITAL RESOURCES


     Net cash used in operating activities during the fiscal year ended December
31,  2002 was $714,525 compared to $67,953 during the fiscal year ended December
31,  2001.  The  primary use of cash in operating activities was to fund the net
loss.  Net  cash used in investing activities for the fiscal year ended December
31,  2002  was  $1,545,800  compared to net cash used in investing activities of
$250,000  for the fiscal year ended December 31, 2001 and consisted primarily of
the  purchase  of  oil  and  gas  interests  and  limited partnerships. Net cash
provided  by financing activities during the fiscal year ended December 31, 2002
was  $2,287,258  compared  to  $318,000  fiscal year ended December 31, 2001 and
consisted  primarily  of  the issuances of a secured convertible note, unsecured
promissory  notes  and shares of our common stock which were partially offset by
costs  relating  to  such financings, including commitment and origination fees,
and  repayment  of  $668,000  of  outstanding  indebtedness.

     Working  capital  decreased  $353,833 during the fiscal year ended December
31,  2002  to  a  deficit of $600,438 as compared to a deficit of $246,605 as of
December  31,  2001.  This  decrease  is  primarily  due to an increase in notes
payable  to $587,082 as compared to $318,000 at December 31, 2001 and a decrease
of  notes  receivable  to  $50,000 from $250,000 at December 31, 2001 due to our
conversion  of  the  note  receivable  from  GGC  to  shares  of  Cytrx  Corp.

         In April 2002, we issued a $1,500,000  convertible promissory note (the
"Convertible  Note") to  Trident  Growth  Fund  f/k/a  Gemini  Growth  Fund,  LP
("Trident").  The Convertible Note is due October 31, 2003,  accrues interest at
12% per annum payable monthly in arrears, is secured by substantially all of our
assets,  is  convertible at the option of Gemini into shares of our common stock
at an initial conversion price of $2.00 per share (currently $.55 per share as a
result of  adjustment  pursuant to anti dilution  provisions of the  Convertible
Note),  and is  redeemable  at our  option  at 100% of par  prior  to  maturity.
Interest is payable in cash unless  Trident  elects to have it paid in shares of
common stock.  The Convertible Note contains  various  financial  covenants with
which we are  required  to  comply.  We failed to comply  with  three  financial
covenants  and received a waiver from Trident  which  expires July 13, 2003.  In
August 2002, we received  repayment of $140,600 of the  principal  amount of our
note receivable from GGC and we issued $470,000  principal  amount of 10% demand
promissory  notes. On October 18, 2002 we issued a $175,000 12% promissory note.
We used  approximately  $1,445,000  of these  funds  to  acquire  our  leasehold
interests in the Jefferson County Prospects,  our limited partnership  interests
in PH Gas, L.P., and our units in Touchstone Resources - 2001 Hackberry Drilling
Fund, L.P. We used approximately  $310,000 to repay Series 1 Promissory Notes in
the aggregate principal amount of $310,000.


                                       23
<PAGE>

         During the fourth  quarter of 2002,  we raised  gross cash  proceeds of
$1,309,600 through the issuance and sale of our equity  securities.  We used the
proceeds of these  offerings  to  purchase  our  interests  in  Louisiana  Shelf
Partners,  L.P. and CSR-WAHA Partners, L.P. In connection with our purchase of a
interest in CSR-WAHA, we issued a $1,500,000 which is due April 30, 2003.

         The forgoing  constitutes our principal sources of financing during the
past twelve months.  We do not currently  maintain a line of credit or term loan
with any commercial bank or other financial institution.  Our capital needs have
been  principally  met  through  proceeds  from the sale of our  equity and debt
securities.

         We are in the development  stage,  have significant debt obligations to
repay  in 2003, and our current liabilities exceed our current assets. As of the
date  of  this  report, we have minimal cash resources. We will need significant
funds  to  meet  cash calls on our various interests in oil and gas prospects to
explore,  produce,  develop,  and eventually sell the underlying natural gas and
oil  products.  Specifically,  PH  Gas,  L.P.  and  PHT  Partners, L.P., limited
partnerships  in  which we have an interest, are subject to capital calls in the
approximate  amount  of  $342,000  which  are due during the first half of 2003,
which  if  not  paid  within  45  days  after the due date, could result in such
partnerships  being  forced  to sell their interest for 1% of the total purchase
price.  We  also  have  funding  commitments  of  approximately  $20,000  to the
Touchstone  Partnership  as  a  result  of problems with sand production at C.G.
Hooks-State  well  in he Jefferson County Prospects. If one or more of the other
owners  of  the leasehold interests in the projects fails to pay their equitable
portion of development costs, we may need to pay additional funds to protect our
ownership  interests.  In  addition,  the  Convertible  Note and $1,500,000 note
payable  to  Continental Southern Resources are due and payable October 31, 2003
and  April  30,  2003,  respectively.


         We believe we will need approximately  $2,200,000 to sustain operations
at current  levels and  satisfy  any capital  calls and other  related  expenses
during the next twelve months.  Based on available cash  resources,  the sale of
our series A preferred stock and projected  revenue from our various oil and gas
projects,  we believe we will have  sufficient  funds to  continue  to meet such
capital calls and operate at current levels through December 2003.  However,  if
we locate additional prospects for acquisition,  experience cost overruns at our
existing prospects or fail to generate projected  revenues,  we will be required
to raise  additional  funds through sales of our securities or otherwise.  If we
are unable to obtain  additional  funds on terms  favorable to us, if at all, we
may be required to delay, scale back or eliminate some or all of our exploration
and well development programs, and may be required to relinquish our interest in
certain prospects.

ITEM 7. FINANCIAL STATEMENTS

         See Financial Statements beginning on page F-1.

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


                                       24
<PAGE>

         The  disclosure  required by this Item was  previously  reported by the
Company in its Current  Report on Form 8-K dated April 25, 2002 as amended  June
7, 2002. The disclosure is not being included  herein in reliance on Instruction
1 to this Item 304.

                                    PART III

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

         The following  sets forth certain  information  about each director and
executive officer of the Company.

<TABLE>
<CAPTION>

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

             NAME                           AGE                   POSITIONS HELD
------------------------------------ ----------------- --------------------------------------
       John B. Connally, III                55              President, CEO and Director
------------------------------------ ----------------- --------------------------------------
          Cecile T. Coady                   50           Secretary, Treasurer and Director
------------------------------------ ----------------- --------------------------------------
           Mark A. Bush                     44                       Director
------------------------------------ ----------------- --------------------------------------
          Wes Franklin                      55                       Director
------------------------------------ ----------------- --------------------------------------
</TABLE>


         The following is a brief summary of the business  experience of each of
the above-named individuals:

            JOHN  B.  CONNALLY,  III  has  served  as the  President  and  Chief
Executive  Officer of the Company since  September 2002 and as a director of the
Company since October 11, 2002. Mr.  Connally has over 30 years of experience in
the  oil and gas  industry,  particularly  in the  oil  services  sector  in the
inspection of pipelines,  petrochemical  plants, and refineries.  Since 1999, he
has been a  principal  in  Graver  Manufacturing  Co.,  a private  company  that
manufactures  pressure vessels for the petrochemical and refining  industry.  In
1990,  Mr.  Connally  was a member of the  founding  Board of Directors of Nuevo
Energy  Company,  an exploration  and production  company listed on the New York
Stock Exchange,  where he served until 1996. Between 1972 and 1983, Mr. Connally
was  an  attorney  with  the law firm of Baker & Botts in Houston, Texas were he
specialized  in  corporate  finance  transactions  for oil and gas and oil field
service companies. Since leaving Baker & Botts in 1983, Mr. Connally has been an
investor in the oil and gas, real estate, and oil field services industries. Mr.
Connally  currently  serves  on  the  Board of Directors of Continental Southern
Resources,  Inc.,  a  gas and oil exploration company whose shares traded on the
OTC  Bulletin  Board.  Mr.  Connally received a Bachelor of Arts degree from the
University  of  Texas  at Austin and a Juris Doctor from the University of Texas
School  of  Law.

            CECILE T. COADY has served as an Officer and Director of the Company
since April 19, 2002. Ms. Coady currently  serves as the Secretary and Treasurer
of the Company and served as its President  between  April and  September  2002.
Since 1990,  Ms. Coady has served as the  President of ESC  Consulting  Services
Corp., a Pennsylvania based private management consulting firm.


                                       25
<PAGE>


            MARK A. BUSH,  has served as director of the Company  since  January
23, 2003.  Mr. Bush has been involved in the oil and gas industry since 1980 and
has  extensive  experience in project  acquisitions,  contract  negotiation  and
evaluating and reviewing oil and gas projects.  Since  September  1990, Mr. Bush
has served as the President and Chief Executive Officer of Touchstone Resources,
Ltd., a Houston,  Texas based oil and gas exploration  and  development  company
whose shares are traded on the TSX Venture  Exchange.  Since 1996,  Mr. Bush has
served as the President of Fortis Energy,  Inc., and since 1991 he has served as
Vice  President  of  Mescalero  Energy,  Inc.  Prior  to 1991,  Mr.  Bush was an
independent operator from Midland, Texas.

            WES  FRANKLIN,  has served as director of the Company  since January
23, 2003. Mr.  Franklin has over 30 years of successful oil and gas  exploration
and  production  experience  and has worked in every  facet of  exploration  and
production.  Since  January  2001,  Mr.  Franklin has served as  Executive  Vice
President of  Touchstone  Resources,  Ltd.,  a Houston,  Texas based oil and gas
exploration and  development  company whose shares are traded on the TSX Venture
Exchange. In 1999, he founded Quantum Oil & Gas, LLC. Between 1980 and 1997, Mr.
Franklin  held senior  management  positions at Tenneco Oil Company and Fina Oil
and Chemical.  At Fina, he was involved in discoveries of 200 million barrels of
oil and 200  billion  cubic feet of natural  gas and  directed  exploration  and
production in several basins in the U.S. including Alaska.

DIRECTORS' AND OFFICERS' TERMS OF OFFICE

         All directors hold office until the next annual meeting of shareholders
and the election and  qualification of their successors.  John B. Connally,  III
and Cecile T. Coady were  elected to the  Company's  Board of  Directors  at the
Company's annual meeting of stockholders on October 11, 2002 to serve for a term
of one year or until their  successors are duly elected and  qualified.  Messrs.
Bush and Franklin were appointed to newly created  directorships  to serve until
the next  annual  meeting of  stockholders  or until their  successors  are duly
elected and qualified.  Officers are elected  annually by the Board of Directors
and serve at the discretion of the Board.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the U.S.  Securities  and  Exchange  Act of 1934,  as
amended (the "Exchange Act"),  requires the Company's officers and directors and
persons who own more than ten percent  (10%) of the  Company's  Common  Stock to
file with the  Securities and Exchange  Commission  ("SEC")  initial  reports of
ownership  and reports of changes in ownership of the  Company's  Common  Stock.
Such officers, directors and ten percent (10%) stockholders are also required by
applicable  SEC rules to furnish the Company with copies of all forms filed with
the SEC  pursuant to Section  16(a) of the  Exchange  Act.  Based  solely on its
review of the copies of such forms  received  by it, or written  representations
from such persons  that no other  reports were  required for such  persons,  the
Company  believes  that  during the fiscal year ended  December  31,  2002,  all
Section  16(a)  filing  requirements   applicable  to  the  Company's  officers,
directors and ten percent (10%) stockholders were satisfied in a timely fashion.

ITEM 10. EXECUTIVE COMPENSATION


                                       26
<PAGE>

         The following  table provides  certain summary  information  concerning
compensation paid to or accrued by the Company's Chief Executive Officer and all
other  executive  officers  of the Company during the fiscal year ended December
31,  2001  and  2002:



                           SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------
                NAME AND PRINCIPAL
                     POSITION                      FISCAL
                                                    YEAR              SALARY($)
--------------------------------------------------------------------------------
John B. Connally, III,                             2002                  $26,000
     President and Chief Executive Officer (1)
--------------------------------------------------------------------------------
Cecile T. Coady,                                   2002                       --
     Former President (2)
--------------------------------------------------------------------------------
Stephen P. Harrington,                             2002                       --
       Former President (3)                        2001                       --
--------------------------------------------------------------------------------

(1)  Mr. Connally has served as the President of the Company since September 17,
     2002.
(2)  Ms.  Coady  served as the  President  of the Company from April 19, 2002 to
     September 17, 2002.
(3)  Mr.  Harrington  served as the  President of the Company from  November 19,
     2001 until April 19, 2002.

         The  Company  did not issue any  options to its  executive  officers in
2002.  As of December  31, 2002,  no  executive  officer of the Company held any
options nor did any  executive  officer  exercise any options  during the fiscal
year ended December 31, 2002.

DIRECTORS COMPENSATION

         In January 2003, the Company issued options to purchase  100,000 shares
of common stock to each of Messrs.  Bush and  Franklin.  In January,  2003,  the
Company  issued  options  to  purchase  200,000  shares of  common  stock to Mr.
Connally.  Directors receive no additional compensation for serving on the Board
of  Directors,  other than  reimbursement  of  reasonable  expenses  incurred in
attending meetings.

CHANGE IN CONTROL PROVISIONS

         Options  issued to certain of the officers and directors of the Company
during 2003, provide for immediate vesting in the event of a "Change In Control"
of the Company. In the event of a Change In Control,  the Company is required to
deliver  written  notice  to  each  optionee  fifteen  (15)  days  prior  to the
occurrence  of a Change  in  Control,  during  which  time such  options  may be


                                       27
<PAGE>

exercised.  Thereafter,  options  which are neither  assumed or  substituted  in
connection  with  such  transaction,   automatically  expire,  unless  otherwise
determined by the Board.  Under the options, a "Change In Control" is defined to
include (i) a sale or transfer of  substantially  all of the  Company's  assets;
(ii)  the   dissolution  or   liquidation  of  the  Company;   (iii)  a  merger,
reorganization  or  consolidation  in which the  Company is  acquired by another
person or entity (other than a holding  company formed by the Company);  or (iv)
the sale in a single  transaction or series of related  transaction  where stock
representing more than 50% of the voting power of all outstanding  shares of the
Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of April 10, 2003,  information with
respect to the securities holdings of all persons which the Company, pursuant to
filings with the Securities and Exchange  Commission,  has reason to believe may
be deemed the beneficial  owners of more than five percent (5%) of the Company's
outstanding  common stock. The following table also sets forth, as of such date,
the  beneficial  ownership  of the  Company's  common  stock by all officers and
directors, individually and as a group.

<TABLE>
<CAPTION>


                                                                        AMOUNT AND NATURE
                                                                          OF BENEFICIAL             PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER                                       OWNERSHIP(1)             OF CLASS(1)
------------------------------------------------------------------ ----------------------------- ------------------
<S>                                                                  <C>                              <C>

John B. Connally, III
5858 Westheimer Street                                                    200,000 (2)                       *
Suite 709
Houston, TX 77057

------------------------------------------------------------------ ----------------------------- ------------------
Cecile T. Coady
5858 Westheimer Street                                                         0                           --
Suite 709
Houston, TX 77057

------------------------------------------------------------------ ----------------------------- ------------------
Mark A. Bush
5858 Westheimer Street                                                    100,000 (3)                       *
Suite 708
Houston, TX 77057

------------------------------------------------------------------ ----------------------------- ------------------
Wes Franklin
5858 Westheimer Street                                                    100,000 (4)                       *
Suite 708
Houston, TX 77057


------------------------------------------------------------------ ----------------------------- ------------------
Howard Herrick, Sole Trustee
N. Herrick Irrevocable Securities Trust                                    1,030,000                        7.1%
295 Madison Avenue
42nd Floor
New York, New York 10017


                                       28
<PAGE>

------------------------------------------------------------------ ----------------------------- ------------------
John Paul Dejoria
9701 Wilshire Blvd                                                         1,100,000                        7.6%
Beverly Hills Ca 90212

------------------------------------------------------------------ ----------------------------- ------------------
Trident Growth Fund, L.P.
F/k/a Gemini Growth Fund, L.P.                                            3,052,771(5)                     17.4%
700 Gemini
Houston, TX 77058

------------------------------------------------------------------ ----------------------------- ------------------
Continental Southern Resources, Inc.
111 Presidential Boulevard                                                  759,000                         5.3%
Suite 158A
Bala Cynwyd, PA 19004

------------------------------------------------------------------ ----------------------------- ------------------
All officers and directors as a group
(4) persons                                                                 400,000                         2.7%

------------------------------------------------------------------ ----------------------------- ------------------
---------------------
*Less than 1%

(1) The  securities  "beneficially  owned" by an  individual  are  determined in
accordance  with the  definition  of  "beneficial  ownership"  set  forth in the
regulations   promulgated  under  the  Securities  Exchange  Act  of  1934  and,
accordingly,  may include  securities owned by or for, among others,  the spouse
and/or minor  children of an individual  and any other relative who has the same
home as such individual, as well as, other securities as to which the individual
has or shares voting or  investment  power or which each person has the right to
acquire within 60 days through the exercise of options or otherwise.  Beneficial
ownership may be disclaimed as to certain of the securities. This table has been
prepared based on 14,417,198  shares of common stock outstanding as of April 10,
2003.

(2)  Consists of shares  issuable  upon  exercise  of options.  Does not include
shares  owned by  Continental  Southern  Resources,  Inc for which Mr.  Connally
serves as a director.

(3) Consists of shares issuable upon exercise of options.

(4) Consists of shares issuable upon exercise of options.

(5) Consists of 2,727,272  shares  issuable upon  conversion  of Debentures  and
325,000 shares issuable upon exercise of warrants. The voting and disposition of
these shares are  controlled  by Scotty D. Cook and Frank  DeLape,  the managing
members of the general  partner of Trident Growth Fund, L.P. f/k/a Gemini Growth
Fund, LP.


                                       29
</TABLE>
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

OPTIONS GRANTED TO EXECUTIVE OFFICERS AND DIRECTORS

         On January 31 2003, the Company granted  non-qualified stock options to
purchase an aggregate of 200,000  shares of common at an exercise  price of $.65
per share  stock to Mark A. Bush and Wes  Franklin  upon  their  appointment  as
directors of the Company. On January 31, 2003, the Company granted non-qualified
stock options to purchase 200,000 shares of common stock at an exercise price of
$.65 per share to John B. Connally, III. The options are exercisable in full and
terminate  on the  earlier of January  30,  2006 or 90 days after  cessation  of
service with the Company.

PURCHASE  OF LIMITED  PARTNERSHIP  INTEREST  IN  CSR-WAHA  PARTNERS,  L.P.  FROM
CONTINENTAL SOUTHERN RESOURCES, INC.

         On January 15, 2003,  the Company  purchased a 99% limited  partnership
interest  (the  "Interest")  in  CSR-WAHA  Partners,  L.P.,  a  Delaware limited
partnership,  from  CSOR  for  a  purchase  price of $2,000,000. Of this amount,
$150,000  was paid in cash, $1,500,000 through the issuance of a promissory note
due  April  30,  2003  and the balance through the issuance of 600,000 shares of
Company  common  stock.  CSOR  paid  $750,000  for  the  Interest  in  2002.


WAIVER OF DEFAULT FROM TRIDENT GROWTH FUND, L.P.

         The Company failed to comply with three financial  covenants  contained
in  the  $1,500,000 Convertible Note (the "Note") issued to Trident Growth Fund,
L.P.  Trident granted a waiver of compliance with such covenants for a six month
period ending January 13, 2003 which was subsequently extended for an additional
six  months  until  July  13,  2003  in consideration of the issuance options to
purchase  25,000  shares of common stock at an exercise price of $.55 per share.
The  warrants  are  immediately  exercisable  and  terminate  April 30, 2012. In
addition,  the  Company is obligated to file a registration statement permitting
the public resale of shares of Common Stock issuable upon conversion of the Note
and  cause registration statement to be declared effective during October, 2002.
Failure  to do so results in a penalty consisting of the issuance of shares each
month  equal  to  .1%  of  the  Company's outstanding shares. Trident waived the
penalty.

LS GAS, LLC

         LS Gas,  LLC,  a  Delaware  limited  liability  company,  serves as the
general partner Louisiana Shelf Partners,  L.P., a Delaware limited  partnership
("Louisiana Shelf"). Mark Bush owns a 25% membership interest in LS Gas, LLC. On
December 31, 2002, the Company purchased a 9.4% limited partnership  interest in
Louisiana  Shelf for  $256,500  and  became a party to the  Limited  Partnership
Agreement of Louisiana Shelf  Partners,  L.P. Under the terms of the partnership
agreement,  once  capital is returned to all limited  partners,  any  additional
amounts available for distribution are allocated 60% to the limited partners and
40% to LS Gas,  LLC, as the  general  partner.  Mr. Bush became  director of the
Company on January 23, 2003.


                                       30
<PAGE>


LOANS FROM CONTINENTAL SOUTHERN RESOURCES, INC.

         In August and October 2002,  CSOR provided loans to the Company in the
principal  amounts  of  $470,000  and  $175,000,  respectively. The loans accrue
interest at the rate of 10% per annum. Principal and accrued interest is payable
on  demand.  As  of  the  date  of this report, $295,000 is due under the loans.


PHT GAS, LLC.

         PHT Gas, LLC, a Delaware limited  liability  company,  serves as
the  general  partner of PHT Partners, L.P., ("PHT L.P."), PH Gas, L.P. ("PH Gas
L.P."),  BPK  South  Valentine  Partners,  L.P. ("BPKS L.P."), and CSR-Hackberry
Partners,  L.P.  ("CSR").  Mark  Bush owns a 25% membership interest in PHT Gas,
LLC.  Mr.  Bush  became  a  director  of  the  Company  on  January  23,  2003.

         On July 16,  2002,  the Company  purchased  a 42%  limited  partnership
interest  (subsequently  reduced  to  32.5%  as a  result  of  the  addition  of
additional  limited  partners) in PH Gas,  L.P. for $150,000 and became party to
the  Limited  Partnership  Agreement  of PH Gas  L.P.  Under  the  terms  of the
partnership  agreement,  once capital is returned to all limited  partners,  any
additional  amounts  available for distribution are allocated 90% to the limited
partners and 10% to PHT Gas, LLC as the general partner.

         On August 9, 2002,  the Company  purchased  a 99%  limited  partnership
interest  in CSR for  $475,010  and  became a party to the  Limited  Partnership
Agreement of CSR. Under the terms of the partnership agreement,  once capital is
returned  to  all  limited  partners,   any  additional  amounts  available  for
distribution  are allocated  80% to the limited  partners and 20% to PHT, LLC as
the general partner.

         On August 14,  2002,  the Company  purchased  a 4% limited  partnership
interest in PHT L.P for  $50,000  and became a party to the Limited  Partnership
Agreement of PHT L.P. Under the terms of the partnership agreement, once capital
is  returned to all limited  partners,  any  additional  amounts  available  for
distribution  are allocated 80% to the limited  partners and 20% to PHT Gas, LLC
as the general partner. CSOR owns a 95% limited partnership interest in PHT L.P.

         On October 17, 2002,  the Company  purchased a 99% limited  partnership
interest in BPKS L.P. for $158,400 and became a party to the Limited Partnership
Agreement  of BPKS  L.P.  Under  the terms of the  partnership  agreement,  once
capital is returned to all limited  partners,  any additional  amounts available
for  distribution  are allocated 50% to the limited partners and 50% to PHT Gas,
LLC as the general partner.

CSR, LLC

         CSR, LLC serves as the general  partner of CSR-WAHA  Partners,  L.P., a
Delaware  limited  partnership  ("CSRWAHA").  Mark  Bush  owns a 25%  membership
interest in CSR,  LLC.  Mr. Bush became a director of the Company on January 23,
2003.  On August 9.  2002,  the  Company  purchased  a 99%  limited  partnership
interest in CSRWAHA for $475,010  and became a party to the Limited  Partnership

                                       31
<PAGE>

Agreement of CSRWAHA. Under the terms of the partnership agreement, once capital
is  returned to all limited  partners,  any  additional  amounts  available  for
distribution  are allocated  80% to the limited  partners and 20% to CSR, LLC as
the general partner.

TOUCHSTONE RESOURCES-2001 HACKBERRY DRILLING FUND, L.P.

         The  Company  owns  a  10.26%   partnership   interest  of   Touchstone
Resources-2001 Hackberry Drilling Fund, L.P. (the "Touchstone  Partnership") and
is a party to the Limited Partnership  Agreement of the Touchstone  Partnership.
Touchstone  Resources  Ventures,  LLC, a wholly owned  subsidiary  of Touchstone
Resources,  USA, Inc., serves as the general partner of Touchstone  Partnership.
Under the terms of the partnership agreement, any distribution of profits of the
Touchstone  Partnership  are allocated 99% to the limited  partner and 1% to the
general partner.  Messrs. Bush and Franklin are directors and executive officers
and directors of Touchstone Resources, USA, Inc.

CONSULTING AGREEMENT WITH ESC CONSULTING SERVICES, CORP.

         On May 31, 2002, the Company  entered into a three (3) year  consulting
agreement with ESC Consulting Services,  Corp. to provide management services to
the Company in consideration of monthly consulting fees in the amount of $6,000.
Ms.  Coady  is the sole owner of ESC Consulting Services, Corp. During 2002, the
Company  accrued  $48,000  of  consulting  fees  under  the  agreement.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following documents are filed as part of this Report.  Portions
of Item 13 are submitted as separate sections of this Report:

                  (1)      Financial statements filed as part of this Report:

                           Report of Independent Certified Public Accountants

                           Balance Sheets at December 31, 2002 and 2001

                           Statement of  Operations  - Years ended  December 31,
                           2002 and 2001 and April 2, 1997  (date of  inception)
                           through December 31, 2002

                           Statement  of  Shareholders'  Deficit  - Years  ended
                           December 31, 2002 and 2001 and April 2, 1997 (date of
                           inception) through December 31, 2002

                           Statements  of Cash Flows - Years ended  December 31,
                           2002 and 2001 and April 2, 1997  (date of  inception)
                           through December 31, 2002

                           Notes to Financial Statements

                  (2)      The following exhibits are filed as part of this
                           Report:


                                       32
<PAGE>

<TABLE>
<CAPTION>


-------------------- -------------------------------------------- -----------------------------------------------
    Exhibit No.                        Exhibit                                   Method of Filing
-------------------- -------------------------------------------- -----------------------------------------------
<S>                         <C>                                                       <C>

        3.1          Articles of Incorporation                    Incorporated by reference to Exhibit 3.1 to
                                                                  the Registrant's Registration Statement on
                                                                  Form 10-SB dated  December 20, 1999
-------------------- -------------------------------------------- -----------------------------------------------
        3.2          Bylaws                                       Incorporated by reference to Exhibit 3.2 to
                                                                  the Registrant's Registration Statement on
                                                                  Form 10-SB dated  December 20, 1999
-------------------- -------------------------------------------- -----------------------------------------------
        3.3          Certificate of Amendment to Articles of      Incorporated by reference to Exhibit 3.3 to
                     Incorporation filed October 21, 2002         the Registrant's Quarterly Report on Form
                                                                  10-QSB for the Quarter Ended September 30,
                                                                  2002
-------------------- -------------------------------------------- -----------------------------------------------
        3.4          Certificate of Designation of Series A 10%   Filed herewith
                     Convertible Preferred Stock
-------------------- -------------------------------------------- -----------------------------------------------
        4.1          12% Secured Convertible Note in the          Incorporated by reference to Exhibit 4.2 to
                     principal amount of $1,500,000 issued to     the Registrant's Quarterly Report on Form
                     Gemini Growth Fund, L.P.                     10-QSB for the Quarter Ended June 30, 2002
-------------------- -------------------------------------------- -----------------------------------------------
        4.2          Warrants to purchase 150,000 shares of       Incorporated by reference to Exhibit 4.3 to
                     common stock issued to Gemini Growth Fund,   the Registrant's Quarterly Report on Form
                     L.P. in April 2002                           10-QSB for the Quarter Ended June 30, 2002
-------------------- -------------------------------------------- -----------------------------------------------
        4.3          Form of 10% Promissory Note in the principal Filed herewith
                     amount of $1,500,000 issued to Continental
                     Southern Resources, Inc.
-------------------- -------------------------------------------- -----------------------------------------------
       10.1          Form of Warrant Certificate issued in        Incorporated by reference to Exhibit 10.4 to
                     connection with receipt of proceeds from     the Registrant's Annual Report on Form 10-KSB
                     issuance of Series 1 Promissory Notes in     for the Year Ended December 31, 2001
                     April 2001
-------------------- -------------------------------------------- -----------------------------------------------
       10.2          Partial Assignment of Oil, Gas and Mineral   Incorporated by reference to Exhibit 10.2 to
                     Lease by and between Touchstone Resources,   the Registrant's Current Report on Form 8-K
                     Inc. and the Registrant dated April 25,      dated May 13, 2002
                     2002
-------------------- -------------------------------------------- -----------------------------------------------
       10.3          Agreement of Limited Partnership of          Incorporated by reference to Exhibit 10.3 to
                     Touchstone Resources - 2001 Hackberry        the Registrant's Current Report on Form 8-K
                     Drilling Fund, L.P.                          dated May 13, 2002
-------------------- -------------------------------------------- -----------------------------------------------


                                       33
<PAGE>

       10.4          Loan Agreement dated April 25, 2002 by and   Incorporated by reference to Exhibit 10.6 to
                     between the Registrant and Gemini Growth     the Registrant's Quarterly Report on Form
                     Fund, LP                                     10-QSB for the Quarter Ended June 30, 2002

-------------------- -------------------------------------------- -----------------------------------------------
       10.5          Security Agreement dated April 25, 2002      Incorporated by reference to Exhibit 10.7 to
                     issued to Gemini Growth Fund, L.P.           the Registrant's Quarterly Report on Form
                                                                  10-QSB for the Quarter Ended June 30, 2002.

-------------------- -------------------------------------------- -----------------------------------------------
       10.6          Option to Purchase 100,000 Shares of         Filed herewith
                     Common Stock issued to Mark A. Bush
-------------------- -------------------------------------------- -----------------------------------------------
       10.7          Option to Purchase 100,000 Shares of         Field herewith
                     Common Stock issued to Wes Franklin
-------------------- -------------------------------------------- -----------------------------------------------
       10.8          Option to Purchase 200,000 Shares of         Filed herewith
                     Common Stock issued to John B. Connally,
                     III
-------------------- -------------------------------------------- -----------------------------------------------
       10.9          Form of Warrant to Purchase 25,000 Shares     Filed herewith
                     of Common Stock issued to Trident Growth
                     Fund, L.P.
-------------------- -------------------------------------------- -----------------------------------------------


                                       34
<PAGE>

      10.10          Form of Investment Agreement by and between  Filed herewith
                     the Registrant and Ocean Resources Capital
                     Holdings, PLC  dated February 21, 2002
--------------------- -------------------------------------------- -----------------------------------------------
        21           Subsidiaries of the Registrant               Filed herewith

-------------------- -------------------------------------------- -----------------------------------------------
       99.1          Certificate of President of Registrant       Filed herewith
                     Pursuant to 18 USC Section 1350, as
                     Adopted Pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002
--------------------- -------------------------------------------- -----------------------------------------------
       99.2          Certificate of Treasurer of Registrant       Filed herewith
                     Pursuant to 18 USC Section 1350, as
                     Adopted Pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002
------------------- -------------------------------------------- -----------------------------------------------

</TABLE>

(b) Reports on Form 8-K.

         The Company filed a Current  Report on Form 8-K dated February 20, 2003
furnishing information pursuant to Regulation FD regarding an investment profile
of the Company available for distribution upon request.

ITEM 14. CONTROLS AND PROCEDURES

         Within  the  90-day  period  prior to the  filing  of this  report,  an
evaluation was carried out under the supervision and with the  participation  of
the Company's  management,  including the Chief  Executive  officer  ("CEO") and
Treasurer,  of  the  effectiveness  of the  Company's  disclosure  controls  and
procedures.  Based on that evaluation, the CEO and Treasurer have concluded that
the Company's  disclosure  controls and  procedures are effective to ensure that
information  required to be disclosed by the Company in reports that it files or
submits  under  the  Securities  Exchange  Act of 1934 is  recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange  Commission rules and forms. There have been no significant  changes in
our  internal  controls  or in other  factors  that could  significantly  affect
internal controls subsequent to the date we carried out this evaluation.



                                       35
<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.

                                       BPK RESOURCES, INC.

                                        /s/  John B. Connally, III
Date: April 14, 2003                   ____________________________________
                                       John B. Connally, III
                                       President and Chief Executive Officer

         Pursuant to the  requirements 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 on the dates indicated.

<TABLE>
<CAPTION>


Signature                                                 Title                                   Date
<S>                                                       <C>                                      <C>

/s/ John B. Connally, III
__________________________                            President, Chief Executive Officer      April 14, 2003
John B. Connally, III                                 and Director

/s/ Cecile T. Coady
__________________________                            Secretary, Treasurer, Principal         April 14, 2003
Cecile T. Coady                                       Financial Officer, Principal
                                                      Accounting Officer and Director

/s/ Mark A. Bush
___________________________                           Director                                April 14, 2003
Mark A. Bush

/s/  Wes Franklin
___________________________                           Director                                April 14, 2003
 Wes Franklin




                                       36

</TABLE>
<PAGE>

                                  CERTIFICATION

I, John B. Connally, III, certify that:

1. I have reviewed this annual report on Form 10-KSB of BPK Resources, Inc. (the
"registrant");

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a)       designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

         b)       evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented  in this  annual  report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a)       all  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal controls; and



                                       37
<PAGE>

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: April 14, 2003                                   /s/ John B. Connally, III
                                                       -------------------------
                                                       John B. Connally, III
                                                       President








                                       38
<PAGE>


                                  CERTIFICATION

I, Cecile T. Coady, certify that:

1. I have reviewed this annual report on Form 10-QSB of BPK Resources, Inc. (the
"registrant");

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a)       designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

         b)       evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented  in this  annual  report our  conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a)       all  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal controls; and



                                       39
<PAGE>

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: April 14, 2003                                       /s/   Cecile T. Coady
                                                           ---------------------
                                                           Cecile T. Coady
                                                           Treasurer







                                       40
<PAGE>

<TABLE>
<CAPTION>

                                  EXHIBIT INDEX



EXHIBIT NUMBER                              DESCRIPTION
<S>                                            <C>

3.4                                         Certificate of Designation of Series A
                                            10% Convertible Preferred Stock

4.3                                         Form of10% Promissory Note in the principal amount of $1,500,000 issued to
                                            Continental Southern Resources, Inc.

10.6                                        Option to Purchase 100,000 Shares of Common Stock issued to Mark A. Bush

10.7                                        Option to Purchase 100,000 Shares of Common Stock issued to Wes Franklin

10.8                                        Option to Purchase 200,000 Shares of Common Stock issued to John B. Connally, III

10.9                                        Form of Warrant to Purchase 25,000 Shares of Common Stock issued to Trident Growth
 Fund, L.P. dated February 21, 2002



                                       41
<PAGE>


10.10                                       Form of Investment  Agreement by and between the Registrant  and Ocean  Resources
                                            Capital Holdings, PLC.


21                                          Subsidiaries of the Registrant


99.1                                        Certificate of President of Registrant to 18 USC Section 1350, as Adopted Pursuant to
                                            Section 906 of the Sarbanes-Oxley Act of 2002

99.2                                        Certificate of Treasurer of Registrant Pursuant to 18 USC Section 1350, as Adopted
                                            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


</TABLE>



                                       42



<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)






                        INDEX TO THE FINANCIAL STATEMENTS





Independent Auditors' Report L J Soldinger Associates                     F-2

Independent Auditors' Report Kurt Saliger                                 F-3

Consolidated Balance Sheets                                               F-4

Consolidated Statements of Operations                                     F-5

Consolidated Statements of Stockholders' Equity                           F-6

Consolidated Statements of Cash Flows                                    F-10

Notes to Consolidated Financial Statements                               F-11



<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
BPK Resources, Inc.
Houston, Texas

We have audited the consolidated balance sheet of BPK Resources, Inc. (a
development stage enterprise) as of December 31, 2002, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of BPK
Resources, Inc. as of December 31, 2001, and for the period April 2, 1997 (date
of inception) to December 31, 2001, were audited by other auditors whose report
dated February 12, 2002, on those statements included an explanatory paragraph
that described the substantial doubt about the Company's ability to continue as
a going concern as a result of no operations or source of revenue discussed in
Note 5 to the financial statements.

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

In our opinion, the 2002 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of BPK
Resources, Inc. as of December 31, 2002, and the consolidated results of
operations, stockholders' equity, and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.


L J SOLDINGER ASSOCIATES



Arlington Heights, Illinois


April 9, 2003

                                      F-2
<PAGE>



                          INDEPENDENT AUDITOR'S REPORT


Bepariko Biocom
Las Vegas, Nevada

I have audited the accompanying balance sheet of BPK Resources, Inc. (formerly
Bepariko Biocom) (a development stage company), as of December 31, 2001 and the
related statement of stockholders' equity for December 31, 2001. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of BPK Resources, Inc. as of December
31, 2001 and the related statement of stockholders' equity for December 31, 2001
and statement of operations and cash flows for year ended December 31, 2001 and
the period April 2, 1997 (inception) to December 31, 2001 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters are also described in Note
5. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.



Kurt D. Saliger C.P.A.
February 12, 2002



                                      F-3
<PAGE>



                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                           Consolidated Balance Sheets



<TABLE>
<CAPTION>
                                     ASSETS
                                    -------
                                                                                       December 31,
                                                                               --------------------------
                                                                                  2002           2001
                                                                               -----------    -----------
<S>                                                                            <C>            <C>
Current Assets
   Cash and cash equivalents                                                   $    26,980    $        47
   Accounts receivable                                                              52,840              -
   Note receivable                                                                  50,000        250,000
   Interest receivable                                                               3,340              -
   Prepaid Expenses                                                                119,524              -
                                                                               -----------    -----------

Total Current Assets                                                               252,684        250,047

Developed Oil and Gas Interests Net, Using Successful Efforts                      505,019              -
Investment in Limited Partnership                                                  785,773              -
Marketable Securities                                                               51,761              -
                                                                               -----------    -----------

                                                                               $ 1,595,237    $   250,047
                                                                               ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities
   Accounts payable and accrued expenses                                       $   241,030    $   178,652
   Payables for oil and gas interest                                                25,010              -
   Notes payable                                                                   292,082        318,000
   Notes payable - related party                                                   295,000              -
                                                                               -----------    -----------

Total Current Liabilities                                                          853,122        496,652
                                                                               -----------    -----------

Commitments and Contingencies

Minority Interest                                                                        -              -

Stockholders' Deficit
   Preferred stock, $.001 par value authorized 10,000,000 shares; none
     issued and outstanding as of December 31, 2002 and December 31, 2001                -              -

   Common stock, $.001 par value; authorized 100,000,000 shares;
     13,817,198 and 11,500,000 shares issued and outstanding at
     2002 and 2001, respectively                                                    13,817          5,750
   Additional paid-in capital                                                    3,076,661        342,324
   Deferred compensation                                                           (44,000)             -
   Subscription receivable                                                        (305,000)             -
   Accumulated other comprehensive loss                                            (78,677)             -

   Deficit accumulated during development stage                                 (1,920,686)      (594,679)
                                                                               -----------    -----------

Total Stockholders' Equity (Deficit)                                               742,115       (246,605)
                                                                               -----------    -----------

                                                                               $ 1,595,237    $   250,047
                                                                               ===========    ===========
</TABLE>

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


                                      F-4
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                                       For the Years          April 2, 1997
                                                                     Ended December 31,       (Inception to
                                                               ----------------------------    December 31,
                                                                   2002            2001            2002
                                                               ------------    ------------    ------------
<S>                                                                <C>             <C>             <C>
Revenues                                                       $    160,967    $          -    $    160,967
                                                               ------------    ------------    ------------

Operating Expenses
   Production expenses                                               81,642               -          81,642
   Depletion and amortization                                       381,229               -         381,379
   Dry hole and Impaired properties                                 146,838               -         146,838
   General and administrative                                       411,278         225,770         678,072
                                                               ------------    ------------    ------------

Total Operating Expenses                                          1,020,987         225,770       1,287,931
                                                               ------------    ------------    ------------

Loss From Operations                                               (860,020)       (225,770)     (1,126,964)
                                                               ------------    ------------    ------------

Other (Income) Expense
   Interest income                                                  (36,498)              -         (36,498)
   Interest expense                                                 434,432         327,735         762,167
   Partnership investment loss                                       68,053               -          68,053
                                                               ------------    ------------    ------------

Total Other Expenses                                                465,987         327,735         793,722
                                                               ------------    ------------    ------------

Net Loss to Common Stockholders                                $ (1,326,007)   $   (553,505)   $ (1,920,686)
                                                               ============    ============    ============

Basic and Diluted Loss per Common Share                        $      (0.11)   $      (0.05)
                                                               ============    ============

Basic and Diluted Weighted Average Common Shares Outstanding     11,710,283      11,500,000
                                                               ============    ============
</TABLE>

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

                                      F-5
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>

                                                                            Accumulated
                                        Common Stock           Additional      Other
                                   -------------------------     Paid-In    Comprehensive  Subscription   Deferred
                                      Shares       Amount        Capital        Loss        Receivable  Compensation
                                   -----------   -----------   -----------  -------------   ----------  ------------
<S>                                     <C>           <C>           <C>          <C>             <C>         <C>
Balance at December 31, 1998         1,500,000   $     1,500   $    16,574  $           -   $        -  $          -

Net Loss                                     -             -             -              -            -             -
                                   -----------   -----------   -----------  -------------   ----------  ------------

Balance at December 31, 1999         1,500,000         1,500        16,574              -            -             -

Common stock issued for cash,
  January 21, 2000                  10,000,000        10,000        10,000              -            -             -

Net Loss                                     -             -             -              -            -             -
                                   -----------   -----------   -----------  -------------   ----------  ------------

Balance at December 31, 2000        11,500,000        11,500        26,574              -            -             -

Beneficial conversion discount
 and warrants to purchase
 310,000 shares of common
 stock at $1.25 issued in
 connection with the
 convertible notes payable                   -             -       310,000              -            -             -

Net Loss                                     -             -             -              -            -             -
                                   -----------   -----------   -----------  -------------   ----------  ------------

Balance at December 31, 2001        11,500,000        11,500       336,574              -            -             -

Officer's contributed services
  April 2002 through
  September 2002                             -             -        10,000              -            -             -

Warrants to purchase 300,000
 shares of common stock at
 $1.00 issued in connection
 with the convertible note
 payable                                     -             -       225,000              -            -             -

Issuance of common stock at
 $0.55 per share in October -
 December 2002 private placement     1,614,528         1,614       886,386              -            -             -

Commissions on $0.55 per share
 private placement                           -             -       (85,500)             -            -             -

Issuance of common stock at
 $0.60 per share in November and
 December 2002 private placement       702,670           703       420,897              -            -             -

Commissions on $0.60 per share
 private placement                           -             -       (35,000)             -            -             -
                                   -----------   -----------   -----------  -------------   ----------  ------------

 Balance to be brought forward      13,817,198   $    13,817   $ 1,758,357  $           -   $        -   $         -
                                   -----------   -----------   -----------  -------------   ----------  ------------
</TABLE>


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


                                      F-6
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                 Consolidated Statement of Stockholders' Equity


<TABLE>
<CAPTION>
                                                   Deficit
                                                 Accumulated
                                                  During the                         Total
                                                 Development                     Comprehensive
                                                    Stage          Total             Loss
                                                 -----------    -----------     ---------------

<S>                                             <C>             <C>             <C>
Balance at December 31, 1998                     $   (17,976)   $        98

Net Loss                                              (1,598)        (1,598)
                                                 -----------    -----------

Balance at December 31, 1999                         (19,574)        (1,500)

Common stock issued for cash,
  January 21, 2000                                         -         20,000

Net Loss                                             (21,600)       (21,600)
                                                 -----------    -----------

Balance at December 31, 2000                         (41,174)        (3,100)

Beneficial conversion discount
  and warrants to purchase
  310,000 shares of common
  stock at $1.25 issued in
  connection with the
  convertible notes payable                                -        310,000

Net Loss                                            (553,505)      (553,505)
                                                 -----------    -----------

Balance at December 31, 2001                        (594,679)      (246,605)

Officer's contributed services
  April 2002 through
  September 2002                                           -         10,000

Warrants to purchase 300,000
  shares of common stock at
  $1.00 issued in connection
  with the convertible note
  payable                                                  -        225,000

Issuance of common stock at
 $0.55 per share in October -
 December 2002 private placement                           -        888,000

Commissions on $0.55 per share
 private placement                                         -        (85,500)

Issuance of common stock at
 $0.60 per share in November and
 December 2002 private placement                           -        421,600

Commissions on $0.60 per share
 private placement                                         -        (35,000)
                                                 -----------    -----------

 Balance to be brought forward                   $  (594,679)   $ 1,177,495
                                                 -----------    -----------
</TABLE>


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

                                      F-7
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                 Consolidated Statement of Stockholders' Equity



<TABLE>
<CAPTION>
                                                                                  Accumulated
                                               Common Stock         Additional       Other
                                         --------------------------  Paid-In     Comprehensive  Subscription     Deferred
                                            Shares       Amount      Capital         Loss        Receivable    Compensation
                                         -----------    ---------- ------------  ------------- ------------- --------------
<S>                                           <C>           <C>        <C>           <C>           <C>           <C>
Balance brought forward                   13,817,198    $  13,817  $ 1,758,357   $          -  $           - $           -

Legal fees incurred for
 private placement                                 -           -        (4,696)             -              -             -

Debt discount in connection
 with reset provision with the
 convertible notes payable                         -           -     1,275,000              -              -             -

Option issued for consulting
 services to purchase 400,000
 shares of common stock                            -           -        48,000              -              -       (48,000)

Amortization of warrants issued
 in connection with consulting
 services                                          -           -             -              -              -         4,000

Subscription receivable on $0.55
 per share private placement                       -           -             -              -       (305,000)            -

COMPREHENSIVE LOSS

Other comprehensive loss:
   Net Loss                                        -           -             -              -              -             -

   Unrealized loss available-for-sale
    securities                                     -           -             -        (78,677)             -             -
                                         -----------    ---------- ------------  ------------- ------------- --------------
    Total Comprehensive Loss

Balance at December 31, 2002              13,817,198    $ 13,817   $ 3,076,661   $    (78,677) $    (305,000) $    (44,000)
                                         ===========    ========== ============  ============= ============== =============
</TABLE>

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

                                      F-8
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                 Deficit
                                               Accumulated
                                               During the                     Total
                                               Development                Comprehensive
                                                  Stage         Total          Loss
                                             --------------- ------------ ---------------

<S>                                             <C>            <C>             <C>
Balance brought forward                       $  (594,679)   $ 1,177,495

Legal fees incurred for
 private placement                                      -        (4,696)

Debt discount in connection
 with reset provision with the
 convertible notes payable                              -     1,275,000

Option issued for consulting
 services to purchase 400,000
 shares of common stock                                 -             -

Amortization of warrants issued
 in connection with consulting
 services                                               -         4,000

Subscription receivable on $0.55
 per share private placement                            -      (305,000)

COMPREHENSIVE LOSS

Other comprehensive loss:
   Net Loss                                    (1,326,007)   (1,326,007)     (1,326,007)

   Unrealized loss available-for-sale
    securities                                          -       (78,677)        (78,677)
                                             --------------- ------------ ---------------

    Total Comprehensive Loss                                              $  (1,404,684)
                                                                          ===============

Balance at December 31, 2002                 $ (1,920,686)    $ 742,115
                                             ===============  ===========
</TABLE>

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

                                      F-9

<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                           For the Years         April 2, 1997
                                                                        Ended December 31,      (Inception) to
                                                                ------------------------------   December 31,
                                                                      2002          2001            2002
                                                                ---------------- ------------- -----------------
<S>                                                                   <C>              <C>           <C>
Cash Flows from Operating Activities
    Net loss                                                    $    (1,326,007) $   (553,505) $    (1,920,686)
    Adjustments to reconcile net loss to
      net cash used in operating activities
       Bad debt                                                          12,121             -           12,121
       Non cash payment of interest                                     (33,159)            -          (33,159)
       Amortization of deferred compensation                              4,000             -            4,000
       Officer's contributed services April 2002 through
        September 2002                                                   10,000             -           10,000
         Amortization of note payable discount and loan costs           316,703       310,000          626,703
       Amortization of proved properties                                345,608             -          345,608
    Changes in assets and liabilities
       Accounts receivable                                              (56,180)            -          (56,180)
       Prepaid expenses                                                 (75,000)            -          (75,000)
       Accounts payable and accrued expenses                             87,389       175,552          258,741
                                                                ---------------- ------------- -----------------

Net Cash Used in Operating Activities                                  (714,525)      (67,953)        (827,852)
                                                                ---------------- ------------- -----------------

Cash Flows from Investing Activities
    Advances                                                                  -      (250,000)        (242,700)
    Repayment from unrelated party                                      140,600             -          140,600
    Loan to unrelated party                                             (50,000)            -          (50,000)
    Purchase of oil and gas interests                                  (850,627)            -         (850,627)
    Investment in limited partnerships                                 (785,773)            -         (785,773)
                                                                ---------------- ------------- -----------------

Net Cash Used in Investing Activities                                (1,545,800)     (250,000)      (1,788,500)
                                                                ---------------- ------------- -----------------

Cash Flows from Financing Activities
    Issuance of debt                                                  1,430,854       318,000        1,748,854
    Issuance of debt - related party                                    645,000             -          645,000
    Repayment of debt                                                  (318,000)            -         (318,000)
    Repayment of debt - related party                                  (350,000)            -         (350,000)
    Issuance of common stock, net issuance costs                        879,404             -          917,478
                                                                ---------------- ------------- -----------------

Net Cash Provided by Financing Activities                             2,287,258       318,000        2,643,332
                                                                ---------------- ------------- -----------------

Net Increase in Cash and Cash Equivalents                                26,933            47           26,980

Cash and Cash Equivalents, Beginning of Period                               47             -                -
                                                                ---------------- ------------- -----------------

Cash and Cash Equivalents, End of Period                        $        26,980  $         47  $        26,980
                                                                ================ ============= =================
</TABLE>

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

                                      F-10

<PAGE>



                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements



NOTE 1 - DESCRIPTION OF BUSINESS

Nature of Operations
--------------------

Bepariko Biocom, Inc. was incorporated under the laws of the state of Nevada on
April 2, 1997 and was an inactive, publicly-quoted company in 2001. On October
11, 2002, the Company changed its name to BPK Resources, Inc. (the "Company").

On November 19, 2001, the Company experienced a change in management when all of
its directors and officers resigned from their positions and new officers and
directors were appointed. In April 2002, the Company's new management
implemented a new business plan and the Company became engaged in the business
of acquiring, exploring, and developing natural gas and oil properties. The
Company is generally not involved as the operator of the projects in which it
participates. Instead, the Company relies on third parties for drilling,
delivering any gas or oil reserves that are discovered, and assisting in the
negotiation of all sales contracts with such purchasing parties. With the
assistance of such third parties, the Company plans to explore and develop these
prospects and sell on the open market any gas or oil that is discovered. The
Company relies on Touchstone Resources USA, Inc., a related party, to assist and
advise the Company regarding the identification and leasing of properties on
favorable terms. The company also relies on Touchstone Resources USA, Inc. to
provide additional reserve assessment analysis and engineering services in
connection with the exploration and development of the prospects. Touchstone
Resources USA, Inc. has a significant level of experience in exploring and
developing gas and oil properties in the regions where the prospects are
located. This strategy is intended to reduce the level of overhead and capital
expenditures required to maintain drilling and production operations. The
Company does not own any drilling rigs, and all of the drilling activities are
conducted by independent drilling contractors. The Company's properties are
primarily located in Texas, specifically, Jefferson County. The Company also has
investments in Louisiana and Thailand.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
--------------------

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America ("US GAAP").

PRINCIPLES OF CONSOLIDATION AND OWNERSHIP INTEREST IN INVESTORS

The accompanying consolidated financial statements include all of the accounts
of BPK Resources, Inc. and its two 99% owned subsidiaries consisting of CSR -
Hackberry Partners, L.P., a Delaware limited partnership formed in July 2002 and
BPK-South Valentine Partners, L.P., a Delaware limited partnership formed in
October 2002.

The various interests that BPK Resources, Inc. owns in investee companies are
accounted for under three methods: consolidation, equity, and cost method. The
applicable accounting method is generally determined based on BPK Resources'
voting interest in the affiliate company.

Consolidation
-------------

Affiliate entities in which BPK Resources, Inc. directly or indirectly owns
more than 50% of the outstanding voting interest are accounted for under the
consolidation method of accounting. Under this method, an investee company's
results of operations are reflected within the Company's consolidated statement
of operations. All significant intercompany accounts and transactions have been
eliminated.

Equity Method
-------------

Under the guidance of Emerging Issues Task Force D-46: "Accounting for Limited
Partnership Investments" the Company uses the equity method to account for all
of  its limited partnership interests that exceed 5% and is less than 50%. Under
the  equity  method  of  accounting,  the  Company's  proportionate share of the
investees' net income or loss is included in "Limited Partnership Losses" in the
Consolidated  Statements  of Operations. Any excess investment is evaluated each
reporting  period  for  impairment and is amortized over the estimated period of
the  remaining  oil  and  gas  reserves.

                                      F-11
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cost Method
-----------

Limited partnerships in which the Company directly or indirectly owns 5% or less
of the outstanding voting interest are accounted for under the cost method of
accounting. Under this method income received from the investees is reflected
within the Company's consolidated statement of operations as investment income
or loss unless the amount of the dividends exceeds the Company's proportionate
share of the affiliates income. In that case the excess amount would be
considered a return of capital and be recorded as a reduction of the investment.

Development Stage Enterprise
----------------------------

The Company is a Development Stage Enterprise, as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7 "Accounting and Reporting for
Development Stage Enterprises." Under SFAS No. 7, certain additional financial
information is required to be included in the financial statements for the
period from inception of the Company to the current balance sheet date.

Oil And Gas Accounting
----------------------

The Company uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved reserves, and
to drill and equip development wells are capitalized. Costs to drill exploratory
wells that do not find proved reserves, associated geological and geophysical
costs, and associated costs of carrying and retaining unproved properties are
expensed.

Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at the
time of impairment by providing an impairment allowance. Other unproved
properties are amortized based on the Company's experience of successful
drilling and average holding period. Capitalized costs of producing oil and gas
properties, after considering estimated dismantlement and abandonment costs and
estimated salvage values, are depreciated and depleted by the unit-of-production
method. Support equipment and other property and equipment are depreciated over
their estimated useful lives.

Valuation allowances are provided if the net capitalized costs of gas and oil
properties at the field level exceed their realizable values based upon expected
future cash flows.

Upon the sale or retirement of a complete unit of a proved property, the cost
and related accumulated depreciation, depletion, and amortization are eliminated
from the property accounts, and the resultant gain or loss is recognized. Upon
the retirement or sale of a partial unit of proved property, the cost is charged
to accumulated depreciation, depletion, and amortization with a resulting gain
or loss recognized in income.

Upon the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.

Revenue is recognized at the time title passes on oil and gas quantities, less
any royalties due. Revenues related to natural gas are recognized using the
entitlement method of accounting for gas imbalances. Any quantities that are in
excess of sales quantities are recorded as a receivable at the lower of the
current market price or the market price at the time the imbalance occurred. Any
quantities that are lower than the sales quantities are recorded as deferred
revenue at the market price at the time the imbalance occurred. There were no
imbalances as of December 31, 2002.



                                      F-12
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation Arrangements
------------------------------------

The Company applies the intrinsic value method of accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25, "Accounting For Stock Issued
To Employees," and related interpretations, in accounting for its stock-based
grants to employees. Under the intrinsic value method of accounting,
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. The Company applies
the disclosure provisions specified in Statement of Financial Accounting
Standards ("SFAS") No. 148, "Accounting For Stock Based Compensation -
Transition and Disclosure - an Amendment of SFAS 123," The Company applies SFAS
No. 123, "Accounting for Stock-Based Compensation," in accounting for
stock-based grants to non-employees.

Use of Estimates
----------------

The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Management believes that it is reasonably possible the following material
estimates  affecting  the financial statements could significantly change in the
coming year (1) estimates of proved oil and gas reserve, (2) estimates as to the
expected  future cash flow from proved oil and gas properties, and (3) estimates
of  future  dismantlement  and  restoration  costs.


The Company's business makes it vulnerable to changes in wellhead prices of
crude oil and natural gas. Such prices have been volatile in the past and can be
expected to be volatile in the future.

By definition, proved reserves are based on current oil and gas prices. Price
declines reduce the estimated quantity of proved reserves and increase annual
amortization expense (which is based on proved reserves).

Cash and Cash Equivalents
--------------------------

Cash and cash equivalents include cash on hand and investments in money market
funds. The Company considers all highly liquid instruments with an original
maturity of 90 days or less at the time of purchase to be cash equivalents.

Credit Risk
-----------

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash deposits at financial institutions. To
mitigate this risk, the Company places its cash deposits only with high credit
quality institutions. At various times during the year, the Company may exceed
the federally insured limits. Management believes the risk of loss is minimal.

Goodwill And Acquired Intangibles
---------------------------------

The Company accounts for goodwill and acquired intangible assets in accordance
with SFAS No. 142, "Goodwill and Other Intangible Assets." Accordingly, goodwill
arising from the acquisition of investments is not amortized, but is reviewed
annually for impairment.

                                      F-13

<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Capitalized Interest
--------------------

The Company policy is to capitalize interest on expenditures for significant
exploration and development projects while activities are in progress to bring
the assets to their intended use. There was no capitalized interest as of
December 31, 2002.

Fair Value of Financial Instruments
-----------------------------------

The carrying amounts reflected in the consolidated balance sheet for cash and
equivalents, short-term receivables and short-term payables approximate their
fair value due to the short maturity of the instruments. The carrying value of
the investment in equity securities approximates fair value based on their
market trading price. The carrying value of notes payable, net of a debt
discount for a beneficial conversion feature, is significantly less than the
fair value which approximates face value of the notes (see Note 12).

Income Taxes
-------------

Income taxes are recorded in the period in which the related transactions are
recognized in the financial statements, net of the valuation allowances which
have been recorded against deferred tax assets. Deferred tax assets and
liabilities are recorded for the expected future tax consequences of temporary
differences between the tax basis and the financial reporting of assets and
liabilities. Net deferred tax assets and liabilities, relating primarily to
federal and state net operating loss carryforwards that have been deferred for
tax purposes, have been offset by a valuation reserve because management has
determined that it is more likely than not the deferred tax assets will not be
realized.

Dismantlement, Restoration And Environmental Costs
--------------------------------------------------

At the time proved property reaches the end of its useful life, equipment is
dismantled, wells are plugged and the property must be restored to a condition
required by environmental laws and regulations. Any estimated costs relating to
future dismantlement and restoration are amortized with capitalized development
costs by field based on proved reserves. The additional amortization will be
carried on the balance sheet as an accrued liability. Management does not
believe an accrual of such cost is required as of December 31, 2002.

Loss Per Share
--------------

Loss per common share is calculated in accordance with SFAS No. 128, Earnings
Per Share ("SFAS 128"). Basic loss per common share is computed based upon the
weighted average number of shares of common stock outstanding for the period and
excludes any potential dilution. Shares associated with stock options, warrants
and convertible debt are not included because their inclusion would be
antidilutive (i.e., reduce the net loss per share).

The common shares potentially issuable arising from these instruments, which
were outstanding during the periods presented in the financial statements,
consisted of:
                                                    2002         2001
                                               ------------- ------------

                    Options                         200,000           -
                    Warrants                      1,312,666     310,000
                    Convertible Debt              2,727,273           -
                                               ------------- ------------

                                                  4,239,939     310,000
                                               ============= ============

                                      F-14
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Segment Information
-------------------

The Company has determined it has one reportable operating segment as defined by
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information."

Reclassifications
-----------------

Certain reclassifications have been made to conform to the prior year's data to
the  current  presentation.  These  reclassifications  had no effect on reported
earnings.

Recent Accounting Pronouncements
--------------------------------

In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations," which provides accounting requirements for retirement obligations
associated with tangible long-lived assets, including the timing of liability
recognition, initial measurement of the liability, allocation of asset
retirement costs to expense, subsequent measurement of the liability, and
financial statement disclosures. SFAS 143 requires that asset retirement costs
be capitalized along with the cost of the related long-lived asset and
subsequently allocated to expense using a systematic and rational method. The
adoption of SFAS 143 may result in (i) an increase of total liabilities, because
more retirement obligations are required to be recognized, (ii) an increase in
the recognized cost of assets, because the retirement costs are added to the
carrying amount of the long-lived asset and (iii) an increase in operating
expense, because of the accretion of the retirement obligation and additional
depreciation and depletion. The majority of the asset retirement obligations
which may be recorded by the Company would relate to the plugging and
abandonment of oil and gas wells. While the Company has not completed the
process of determining the effect of this new accounting pronouncement on its
consolidated financial statements, the Company currently expects that the effect
of SFAS No. 143 on the Company's financial statements, when it becomes
effective, will not be significant.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections."
For most companies, SFAS No. 145 will require gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under SFAS
No. 4. Extraordinary treatment will be required for certain extinguishments as
provided in Accounting Principles Board Opinion No. 30. SFAS No. 145 also amends
SFAS No. 13 to require certain modifications to capital leases be treated as a
sale-leaseback and modifies the accounting for sub-leases when the original
lessee remains a secondary obligor (or guarantor). SFAS No. 145 is effective for
transactions occurring after May 15, 2002, and is not expected to have a
material impact on the results of operations or financial position of the
Company.

FASB Statement 146, "Accounting for Costs Associated with Exit or Disposal
Activities," addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The principal
difference between Statement 146 and Issue 94-3 relates to Statement 146's
requirements for recognition of a liability for a cost associated with an exit
or disposal activity. Statement 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. Under Issue 94-3, a liability for an exit cost as generally defined in
Issue 94-3 was recognized at the date of an entity's commitment to an exit plan.
A fundamental conclusion reached by the FASB in this Statement is that an
entity's commitment to a plan, by itself, does not create an obligation that
meets the definition of a liability. Therefore, this Statement eliminates the
definition and requirements for recognition of exit costs in Issue 94-3. This
Statement also establishes that fair value is the objective for initial
measurement of the liability. The provisions of this statement are effective for
exit or disposal activities that are initiated after December 31, 2002, and is
not expected to have a material impact on the results of operations or financial
position of the Company.

                                      F-15
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123 to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require more prominent disclosure in
both annual and interim financial statements. The transition guidance and annual
disclosure provisions of SFAS No. 148 are effective for fiscal years ending
after December 15, 2002. The interim disclosure provisions are effective for
financial reports containing financial statements for interim periods beginning
after December 15, 2002. The Company did not adopt the fair value method of
valuing stock options and will continue to apply Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for stock options. The Company has adopted the
disclosure provisions of SFAS No. 148.


NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES

The accompanying financial statements have been prepared in accordance with U.S.
GAAP, which contemplates continuation of the Company as a going concern. The
independent auditors report on the Company's 2001 financial statement included a
paragraph regarding substantial doubt about the Company's ability to continue as
a going concern. As was discussed in the notes for the 2001 financial
statements, the Company had no source of revenue or business operations. In
2001, the Company hired new management and has implemented its business plan.
The Company is in its development stage and has significant debt obligations to
repay in future years and its current liabilities exceed its current assets.
Additionally, the Company will need significant funds to meet its cash calls on
its various interests in oil and gas prospects to explore, produce, develop, and
eventually sell the underlying natural gas and oil products under its interests
and to acquire additional properties. The Company believes that its projected
revenues from its gas and oil operations and issuance of Series A preferred
stock will provide sufficient funds to fund its operations through December
2003. In the event that the Company locates additional prospects for
acquisitions, experiences cost overruns at its prospects, or fails to generate
projected revenues, the Company will be required to raise funds through
additional offerings of its securities in order to have the funds necessary to
complete these acquisitions and continue its operations.

If the Company is unable to obtain additional funds when they are required or if
the funds cannot be obtained on terms favorable to the Company, management may
be required to delay, scale back or eliminate its well development program or
license third parties to develop or market products that the Company would
otherwise seek to develop or market itself, or even be required to relinquish
its interest in the properties. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


NOTE 4 - STOCK SPLIT

On December 30, 2002 the number of outstanding shares of common stock were split
two-for-one. All share and per share amounts in the financial statements reflect
the stock splits.


                                      F-16
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 5 - NOTE RECEIVABLE

In April 2001, the Company entered into a financing arrangement with Global
Genomics Capital, Inc. ("GGC"), whereby the Company advanced $250,000 to GGC and
GGC issued convertible promissory notes in the principal amount of $250,000 (the
"GGC Notes") to the Company. The GGC Notes accrued interest at a rate of 10% per
annum. The GGC notes matured on August 31, 2001. In 2002, the Company and GGC
entered into an agreement whereby the Company extended the date for the
repayment of the GGC notes and agreed to a repayment or conversion of the GGC
notes into shares of GGC common stock in connection with the proposed merger of
GGC with CytRx Corp., a publicly traded company, trading on the NASDAQ under the
ticker symbol "CYTR". Effective August 7, 2002 (the effective date of the merger
between GGC and CytRx), the Company agreed to accept $140,600 and 207,044 shares
of CytRx Corp.'s common stock in full payment of principal and interest of the
note. The total amount of the note due, including interest of $33,159, was
$283,159. As of August 7, 2002, the trading price of CytRx shares was $0.63.
Therefore, the market value as of August 7, 2002 of the 207,044 shares of CytRx
common stock was $130,438. In addition to the $140,600 cash received, the total
repayment of the GGC note amounted to $271,038. Bad debt expense recognized
during the twelve months ending December 31, 2002 amounted to $12,121.

As of December 31, 2002, the Company had an unsecured demand loan, which it had
made to Pawnxchange, Inc. in the amount of $50,000. The loan bears interest at
8% per annum. The Company has recorded $2,747 of interest receivable as of
December 31, 2002.


NOTE 6 - OIL AND GAS INTERESTS

On April 26, 2002, the Company acquired an interest in the Hooks State Gas Unit
Number 1 ("Hooks"), Melton Well Number 1 ("Melton"), located in the Hackberry
Trend in Jefferson County, Texas (collectively, the "Prospects"), for a purchase
price of $350,000. The Company acquired these assets through an assignment from
Vitel Ventures Corporation ("Vitel"). Vitel held the right to purchase these
assets from Touchstone Resources USA, Inc. ("Touchstone") in exchange for the
cancellation of a loan in the principal amount of $350,000, which it had
previously extended to Touchstone. Upon receiving payment from the Company,
Vitel immediately exercised the rights and assigned them to the Company.
Consequently, Touchstone transferred the gross working interest in the Prospects
to the Company. The Company capitalized $5,612 of legal fees and recorded
depletion expense in the amount of $181,872 regarding this investment in 2002.

On August 9, 2002, the Company's 99% owned subsidiary, CSR-Hackberry Partners,
L.P. ("CSR") also acquired an interest in the Prospects, for a purchase price of
$475,010. CSR acquired these assets from Touchstone. In 2002, CSR has paid other
costs which it capitalized related to the Prospects in the amount of $20,000 and
recorded additional depletion expense in the amount of $163,736 for this
investment.

The chart below describes the interests in the wells.

                                                          Net Revenue
                                                        Interest Before
                                                             Payout
                                                       --------------------

     BPK Resources, Inc.:
        Melton                                                4.09%
        Hooks                                                 4.59

     CSR-Hackberry:
        Melton                                               10.23
        Hooks                                                 6.89

                                      F-17
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 7 - LIMITED PARTNERSHIP INTERESTS

CSR-Hackberry Partners, L.P.
----------------------------

On July 31, 2002, the Company entered into a limited partnership agreement with
PH Gas, LLC, the general partner. The limited partnership formed was CSR of
which the Company is the sole limited partner with a 99% interest. The Company
paid $175,000 to the partnership for this interest. The Company has also
advanced $250,000 to the partnership as of December 31, 2002. On August 9, 2002,
CSR invested a total of $495,010 in the South China Prospect and the South
French Prospect in the Hackberry Trend located in Jefferson County.

The Company accounts for its investment in CSR-Hackberry Partners, LP using the
consolidation method.

BPK-South Valentine Partners, L.P.
----------------------------------

On October 17, 2002, the Company entered into a limited partnership agreement
with PHT Gas, LLC, the general partner. The limited partnership formed was
BPK-South Valentine Partners, L.P. ("BPK South") of which the Company is the
sole limited partner with a 99% interest. The Company was responsible for
contributing $158,400 to the partnership and has paid $153,000 as of December
31, 2002. BPK South invested a total of $146,838 in South Valentine, L.P., a
Texas limited partnership, which has oil and gas properties located in Lafourche
Parish, Louisiana. The Company incurred approximately $147,000 loss on its
investment in the partnership as a result of the partnership drilling a well
which was a dry hole.

The Company accounts for its investment in BPK-South Valentine Partners, LP
using the consolidation method.

PH Gas, L.P.
------------

On July 17, 2002, the Company paid $150,000 to PH Gas, L.P. in exchange for a
42% limited partnership interest therein. PH Gas, L.P. thereupon invested a
total of $400,000 in APICO, LLC ("APICO"), a Delaware limited liability company
and in return received 400 of APICO's membership shares. The limited partnership
agreement was subsequently amended as of September 11, 2002 to include
additional limited partners, which thereby reduced the Company's limited
partnership interest to 32.5%. PH Gas, L.P. paid other capitalized costs
totaling $105,102 related to its investment as of December 31, 2002.

The business of APICO is to farm-in to certain concessions (the "Concessions")
in Phu Horm Gas Field Project in the Kingdom of Thailand, which are controlled
by Amerada Hess (Thailand) Limited which is acting as the operator; to acquire
and own property interests and other rights in the Concessions; to participate
in exploring the Concessions, in developing and operating oil and gas wells in
the Concessions, in financing its operations, in selling production from such
wells and in selling interests in the Property and/or the Concession; and to
take all other actions necessary, appropriate or advisable in connection with
such business.

The Company is not subject to capital calls in connection with its limited
partnership interest in PH Gas, L.P. However, PH Gas, L. P. is subject to cash
calls from its investment in APICO as explained below. If PH Gas, L. P. does not
meet its cash calls, then the Company's investment in PH Gas, L.P. may become
impaired. The APICO membership agreement indicates PH Gas, L.P. and the other
APICO members will be called upon from time to time for additional contributions
so as to meet the reasonable capital requirements of APICO. If PH Gas, L.P., or
any other member, fails to make required capital contributions or meet the
required cash calls in the amounts and at the times specified in the membership
agreement, then they would be in default. If the default is not cured within 45
days, then APICO has the right to repurchase the defaulting members' shares for
1% of their original purchase price.

The Company accounts for its investment in PH Gas, L.P. using the equity method.
The pro rata share of loss reflected on the December 31, 2002 income statement
of the Company is $1,806.


                                      F-18
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 7 - LIMITED PARTNERSHIP INTERESTS (Continued)

Touchstone Resources - 2001 Hackberry Drilling Fund L.P.
-------------------------------------------------------

On April 22, 2002, the Company acquired two units, representing an approximate
10.26% partnership interest, of Touchstone Resources-2001 Hackberry Drilling
Fund, L.P. (the "Partnership") for a purchase price of $400,000 in the Gaulding
Well Number 2 ("Gaulding"), in the Hackberry Trend located in Jefferson County,
Texas (collectively, the "Prospects 1"). Touchstone Resources Ventures, LLC, the
general partner of the Partnership, is responsible for oversight and
coordination of the development and management of the Prospects 1 in conjunction
with Touchstone Resources, USA, the operator of the Prospects 1.

The Company accounts for this interest using the equity method. The pro rata
share of loss reflected on the December 31, 2002 income statement of the Company
is $66,247. The Company received $16,174 in dividends during 2002, which reduced
the investment in the partnership.

This chart describes the interest in the wells.

                                                    Net Revenue
                                                  Interest Before
                                                       Payout
                                                 --------------------

        Melton                                          3.78%
        Hooks
                                                        4.24
        Gaulding
                                                        1.60

Louisiana Shelf Partners, L.P.
------------------------------

On December 31, 2002, the Company entered into a limited partnership agreement
with LS Gas, LLC, the general partner. The limited partnership formed was
Louisiana Shelf Partners, L.P. ("LSP") of which the Company received a limited
partnership interest of approximately 9% for a $256,500 capital contribution;
however, the Company has contributed $270,000 as of December 31, 2002. The other
partners were responsible for contributing an aggregate of $2,362,500 to LSP,
the majority of which was paid by December 31, 2002. As of December 31, 2002,
LSP acquired from Louisiana Shelf Exploration, Inc. certain geological and
geophysical data and an interest in oil, gas and mineral leases located in
Cameron Parish, Louisiana for a purchase price of $2,450,000 of which $370,000
remained payable on that date. Pursuant to the partnership agreement, the
Company and the other LSP partners will be called upon from time to time for
additional contributions so as to meet the reasonable capital requirements of
LSP.

The Company accounts for this interest using the equity method.

PHT Partners, L.P.
-------------------

On August 14, 2002, the Company entered into a limited partnership agreement
with PH Gas, LLC, the general partner. The limited partnership formed was PHT
Partners, L.P. ("PHT") of which the Company received a limited partnership
interest of 4.1% in exchange for a $50,000 capital contribution. The other
partners were responsible for contributing an aggregate of $1,162,000 to PHT
which was paid prior to December 31, 2002. PHT invested $883,000 in APICO as of
December 31, 2002, in return for 883 units which represented a 21.54% interest.

The Company accounts for this interest using the cost method.



                                      F-19
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 8 - DEVELOPED OIL AND GAS PROPERTIES

Oil And Gas Costs Summary
--------------------------

Included below is the Company's investments and activity in oil and gas
producing activities consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                            2002           2001
                                                                       --------------   -----------

<S>                                                                    <C>              <C>
         Proved property acquisition costs                             $   825,010      $      -
         Development costs                                                       -             -
         Capitalized acquisition costs                                      25,617             -
         Accumulated depreciation, depletion, amortization,
           and valuation allowance                                       (345,608)             -
                                                                       --------------   -----------

         Net capitalized costs                                         $   505,019      $      -
                                                                       ==============   ===========
</TABLE>


Results Of Operations From Oil And Gas Producing Activities
-----------------------------------------------------------

Results of operations from oil and gas producing activities (excluding general
and administrative expense, and interest expense) consisted of the following at
December 31:

<TABLE>
<CAPTION>

                                                                             2002           2001
                                                                       ---------------   -----------
<S>                                                                       <C>               <C>
         Oil and gas sales                                             $    160,967      $        -
         Production costs                                                   (81,642)              -
         Taxes other than income taxes                                            -               -
         Depletion, depreciation and amortization                          (345,608)              -
                                                                       ---------------   -----------

          Results of operations from oil and gas producing activities  $   (266,283)     $        -
                                                                       ===============   ===========
</TABLE>





NOTE 9 - MARKETABLE SECURITIES

On August 7, 2002, the Company acquired 207,044 shares of CytRx Corp.'s common
stock as partial payment of principal and interest on a note. Management
determines the appropriate classifications of its investments using SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities" at the time
of purchase, and re-evaluates such determinations at each balance sheet date.

The marketable securities reflected in these financial statements are deemed by
management to be "available-for-sale" and, accordingly, are reported at fair
value, with unrealized gains and losses reported in other comprehensive income
and reflected as a separate component within the Statement of Stockholders'
Equity section of the balance sheets. Realized gains and losses on securities
available-for-sale are included in other income/expense and, when applicable,
are reported as a reclassification adjustment, net of tax, in other
comprehensive income. Gains and losses on the sale of available-for-sale
securities are determined using the specific-identification method.


                                      F-20
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 9 - MARKETABLE SECURITIES (Continued)

Available-for-sale securities consist of the following at December 31, 2002:

                                                      Gross
                                                   Unrealized
                                       Cost           Loss        Fair Value
                                     -----------   ------------  ------------

Stock                                $  130,438    $   78,677    $    51,761
                                     -----------   ------------  ------------

Total Current                        $  130,438    $   78,677    $    51,761
                                     ===========   ============  ============

There were no marketable securities at December 31, 2001.


NOTE 10 - INCOME TAXES

Deferred income taxes result from the net tax effects of temporary timing
differences between the carrying amounts of assets and liabilities reflected on
the financial statements and the amounts recognized for income tax purposes. The
tax effects of temporary differences and net operating loss carryforwards that
give rise to significant portions of the deferred tax asset (liability) are as
follows at December 31:
<TABLE>
<CAPTION>

                                                                                     2002           2001
                                                                                 ------------    ----------
<S>                                                                              <C>             <C>
      Deferred tax asset
          Other                                                                  $  37,100       $       -
          Tax benefit arising from net operating loss carry forward                493,500         112,600
                                                                                 ------------    ----------

                                                                                   530,600         112,600
      Less valuation allowance                                                    (530,600)       (112,600)
                                                                                 ------------    ----------

      Net deferred tax asset                                                     $       -       $       -
                                                                                 ============    ==========
</TABLE>


Income tax benefit consists of the following at December 31:
<TABLE>
<CAPTION>

                                                                                       2002            2001
                                                                                  --------------  -------------
<S>                                                                               <C>             <C>
      Deferred
          Federal                                                                 $      30,500   $          -
          State                                                                           6,600              -
      Federal and state benefit of net operating loss carry forward                     493,500        112,600
                                                                                  --------------  -------------
                                                                                        530,600        112,600
      Less valuation allowance                                                         (530,600)      (112,600)
                                                                                  --------------  -------------

      Income tax benefit                                                          $           -   $          -
                                                                                  ==============  =============
</TABLE>


                                      F-21
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 10 - INCOME TAXES (Continued)

At December 31, 2002, the Company had net operating loss carryforwards for
federal and state income tax purposes amounting to approximately $1,247,800. The
federal and state net operating loss carryforwards expire beginning 2018 through
2020. However, these carryforwards may be limited due to changes in the
ownership of the Company as a result of future equity offerings. Recognition of
the benefits of the deferred tax assets will require that the Company will
generate future taxable income. There can be no assurance that the Company
generates any earnings or any specific level of earnings in future years.
Therefore, the Company has established a valuation allowance for deferred tax
assets (net of liabilities) of approximately $530,600 and $112,600 as of
December 31, 2002 and 2001, respectively.

The following table presents the principal reasons for the difference between
the Company's effective tax rates and the United States federal statutory income
tax rate of 34%.
<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                                  ------------------------------
                                                                                    2002                2001
                                                                                  -------------    -------------
<S>                                                                               <C>               <C>
      Federal income tax benefit at statutory rate                                $  464,100        $    92,700
      State income tax benefit (net of effect of federal benefit)                     66,500             19,900
      Less valuation allowance                                                      (530,600)          (112,600)
                                                                                  -------------    -------------

      Income Tax Benefit                                                          $        -        $         -
                                                                                  =============    =============

      Effective Income Tax Rate                                                        0%                0%
                                                                                  =============    =============
</TABLE>


NOTE 11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The Company had the following accounts payable and accrued expenses outstanding
at December 31:

<TABLE>
<CAPTION>
                                                                 2002            2001
                                                              -------------   -----------

<S>                                                            <C>            <C>
      Accrued Interest                                         $  33,445      $        -
      Accrued Interest Related Party                              11,305               -
      Accounts Payable                                            11,024               -
      Other Accrued Expenses                                     185,256         178,652
                                                              -------------   -----------

                                                               $ 241,030       $ 178,652
                                                              =============   ===========
</TABLE>


At December 31, 2002, the Company owed payables for oil and gas interests in the
amount of $25,010 in connection with the Texas Prospects acquired.


                                      F-22
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 12 - NOTES PAYABLE

Notes payable consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                                2002            2001
                                                                          ----------------  -------------

<S>                                                                       <C>               <C>
  12% Secured convertible note                                            $    1,500,000    $          -
  10% Promissory note - related party                                            295,000               -
  10% Promissory note                                                             11,000               -
  10% Convertible promissory notes                                                     -         310,000
  Other                                                                                -           8,000
                                                                          ----------------  -------------

                                                                               1,806,000         318,000

      Less unamortized discount                                                1,218,918               -
                                                                          ----------------  -------------

                                                                          $      587,082    $    318,000
                                                                          ================  =============
</TABLE>


12% Secured Convertible Note
----------------------------

In April 2002, the Company entered into a loan agreement pursuant to which it
borrowed $1,500,000 from Gemini Growth Fund, LP ("Gemini"), a Delaware limited
partnership. Gemini subsequently changed their name to Trident Growth Fund, L.P.
The Company's obligation to repay the loan is evidenced by a 12% secured
convertible promissory note. The Company's obligation to repay the note is
secured by a security interest granted to the lender covering substantially all
of the assets of the Company including a collateral mortgage and assignment of
lease and working interests. The note matures on October 31, 2003, however the
Company has the option to redeem the note at 100% of face value prior to the
maturity date. Gemini has the option to convert the principal amount of the note
plus all accrued interest into common stock of the Company at a conversion rate
of $0.55 per share. Gemini was issued warrants to purchase 300,000 shares of the
Company's common stock as additional incentive to make the loan. The warrants
expire on the earlier of April 30, 2012 or the date on which the entire
principal amount of the convertible notes is converted to common stock.

The conversion rate of the note and exercise price of the warrants is $0.55
which is subject to antidilution and price adjustments per the agreements. The
Company paid loan commitment and origination fees of 1% and 4%, respectively,
which were recorded as loan costs. These costs will be amortized over the term
of the loan. Interest is payable in cash unless Gemini elects to have the
interest paid in common stock of the Company. As described in the loan
covenants, the Company is required to comply with various financial covenants.
Any failure to comply with such covenants may be deemed a default on the loan by
Gemini. As of December 31, 2002, the Company failed to comply with three
financial covenants but received a waiver from the lender.

Under  the terms of the loan agreement, the Company was required to register all
shares  of  its common stock issuable upon conversion of the note or exercise of
the  warrants,  within  180  days  from the date of the closing of the loan. The
Company  was  originally  required to fully register the common stock by October
2002. The Company would have been subject to a monthly penalty of 0.1% shares of
its  common  stock  then  outstanding  computed on a fully diluted basis per day
until  the  shares are registered, however, Gemini waived the specific covenants
for six months. Subsequent to December 31, 2002, the Company granted warrants to
purchase 25,000 shares of common stock at an exercise price of $0.55, subject to
periodic  adjustments  based  on market trading price, which expire on April 30,
2012  to  Gemini  in  consideration  for  the  granting  of  a waiver due to the
Company's  failure  to  meet  their  loan  covenants.


                                      F-23
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 12 - NOTES PAYABLE (Continued)

Under Emerging Issues Task Force ("EITF") 00-27: "Application of Issue No. 98-5
to Certain Convertible Instruments", the Company has allocated the proceeds from
issuance of the convertible promissory note and warrants based on a fair value
basis of each item. The fair value of the warrant was determined to be $225,000
by an independent valuation. The conversion price was reduced to $0.55 (post
split) on October 26, 2002 upon the issuance of the Company's common stock in a
private placement offering which resulted in the reset of the conversion price.
The reset of the conversion amount resulted in a beneficial conversion feature
of $1,275,000. Under EITF 00-27 a discount was recorded against the note payable
for the amount of the warrant and beneficial conversion feature which is being
amortized over the remaining term of the note. As of December 31, 2002, the
Company amortized $281,082 of the discount as interest expense.

10% Promissory Notes
--------------------

As of December 31, 2002, the Company had borrowed $295,000 with interest payable
at  10%  per  annum from Continental Southern Resources, Inc. (a related party).
The  notes  plus accrued interest are payable on demand. As of December 31, 2002
the  Company  has  accrued $12,851 of interest related to the notes. The Company
and Continental Southern Resources, Inc. have one common director on their Board
of  Directors  who  also  serves  as  president  of  the  Company.

As of December 31, 2002, the Company has outstanding promissory notes to 1025
Investments, Inc. in the amount of $1,000 and a promissory note to CSR-Waha in
the amount of $10,000.

10% Convertible Promissory Notes
--------------------------------

In April 2001 and as amended April 10, 2002, the Company issued $310,000 in
convertible promissory notes with interest payable at 10% per annum. In
connection with the issuance of the convertible promissory notes, the Company
also issued warrants which were exercisable immediately to purchase 310,000
shares of the Company's common stock. The warrants have an exercise price of
$1.25 per share and expire in April 2004. The notes plus accrued interest were
originally due upon the earlier of April 10, 2003 or upon the receipt of funds
or financing from any source. The principal amount of the notes was repaid April
26, 2002. As of December 31, 2002 the Company has paid $18,653 of the $32,556 of
accrued interest related to the notes.

EITF 00-27: "Application of Issue No. 98-5 to Certain Convertible Instruments,"
the Company has allocated the proceeds from issuance of the convertible Series 1
Promissory Notes and warrants based on a fair value basis of each item.
Consequently, a discount was recorded against the convertible Series 1
Promissory Notes. An additional beneficial conversion discount was recorded
since the Series 1 Promissory Notes were convertible into common shares of stock
at a rate of $2.50 per share, before stock split, while the prevailing common
stock share price was $5.00. Under EITF 00-27 the note discounts amounting to
$310,000 were amortized over the four month period from the date of issuance to
the stated redemption date of the notes, which is September 1, 2001.


NOTE 13 -  SUBSCRIPTION RECEIVABLE

On December 5, 2002, the Company's Board of Directors authorized the sale of
550,000 shares of common stock at a par value of $.001 in return for $305,000.
The Company initially recorded a subscription receivable of $305,000 which was
collected during January 2003.


                                      F-24
<PAGE>


                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 14 - STOCKHOLDER'S EQUITY

On July 24, 1997, the Company issued 1,500,000 shares of its $0.001 par value
common stock to its directors in consideration of $18,074 in cash.

On January 21, 2000, the Company completed a public offering that was registered
with the State of Nevada pursuant to N.R.S. 90.490 and was in compliance with
federal registration pursuant to the Form SB-2 filed with the Securities and
Exchange Commission which was declared effective on December 22, 1999.
Subsequently, the Company sold 10,000,000 shares of its common stock at a price
of $0.004 per share for a total of $20,000 cash.

During October and November 2002, the Company sold and issued 1,614,528 shares
of common stock in private placement transactions for $0.55 per share. The
Company recorded $85,500 in offering costs and $3,287 in legal fees related to
the raise.

During November and December 2002, the Company sold and issued 702,670 shares of
common stock and warrants to purchase 702,670 shares in a private placement for
$0.60 per share. The Company recorded $35,000 in offering costs and $1,409 in
legal fees related to the raise.

On December 1, 2002, the Company issued an option to purchase 400,000 shares of
the Company's common stock pursuant to a consulting agreement. The Company
recorded deferred compensation in the amount of $48,000 to be amortized as
consulting expense over one year. As of December 31, 2002, $4,000 of this amount
had been amortized.

On December 30, 2002, the Company effected a two for one stock split, which has
been reflected in these financial statements.

STOCK WARRANTS

The Company had the following outstanding common stock warrants to purchase its
securities at December 31:
<TABLE>
<CAPTION>

                                                 2002                                       2001
                                ---------------------------------------    ----------------------------------------

                                     Number of          Exercise Price          Number of           Exercise Price
Description of Series             Warrants issued          Per Share         Warrants issued          Per Share
----------------------------    -------------------    ----------------    -------------------    -----------------
<S>                                      <C>                <C>                     <C>                <C>
Expire April 2004                        310,000            $   1.25                310,000            $    1.25
Expire April 2012                        300,000            $   0.55                      -            $       -
Expire November 2005                     702,666            $   0.60                      -            $       -
                                -------------------                        -------------------

Common Stock                           1,312,666                                    310,000
                                ===================                        ===================
</TABLE>

STOCK OPTIONS

The Company follows the provisions of SFAS No. 123. As permitted under SFAS No.
123, the Company has continued to utilize APB 25 in accounting for its
stock-based compensation to employees. Had compensation expense for the years
ended December 31, 2002 and 2001 been determined under the fair value provisions
of SFAS No. 123, as amended by SFAS 148, the Company's net loss and net loss per
share would not have differed.

                                      F-25
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 14 - STOCKHOLDER'S EQUITY (Continued)

<TABLE>
<CAPTION>
                                                                                   2002               2001
                                                                             -----------------    ---------------

<S>                                                                          <C>                  <C>
       Net income, as reported                                               $   (1,326,007)      $   (553,505)
       Add:  Stock-based employee compensation expense included
            in reported net income determined under APB No. 25,
            net of related tax effects                                                    -                  -
       Deduct:  Total stock-based employee compensation expense
           determined under fair-value-based method for all awards,
           net of related tax effects                                                     -                  -
                                                                             -----------------    ---------------

       Pro forma net income                                                  $   (1,326,007)      $   (553,505)
                                                                             -----------------    ---------------

       Earnings per share:
            Basic - as reported                                              $        (0.11)      $      (0.05)
            Basic - pro forma                                                $        (0.11)      $      (0.05)
</TABLE>

These pro forma amounts may not be representative of future disclosures since
the estimated fair value of stock options is amortized to expense over the
vesting period and additional options may be issued in future years. The
estimated fair value of each option granted was calculated using the
Black-Scholes option pricing model. The following summarizes the weighted
average of the assumptions used in the model.

                                                    2002           2001
                                                  ----------  ------------

          Risk free rate                            1.26%           N/A
          Expected years until exercise              1.0            N/A
          Expected stock volatility                  110%           N/A
          Dividend yield                              -             N/A
                                                  ==========  ============


No options were issued prior to 2002. The following tables summarize the
Company's stock option activity and related information during 2002:

                                            Number of         Weighted-Average
                                             Shares           Exercise Price
                                           ---------------   ------------------

      Balance at December 31, 2001                    -       $            -

      Granted                                   200,000
                                           ---------------   ------------------

      Balance at December 31, 2002              200,000       $            -
                                           ===============   ==================

                                      F-26
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 14 - STOCKHOLDER'S EQUITY (Continued)

<TABLE>
<CAPTION>
                                          OPTIONS OUTSTANDING                                OPTIONS EXERCISABLE
                       -----------------------------------------------------------    ----------------------------------
                            Number of               Weighted          Weighted             Number            Weighted
     Range of           Outstanding Shares          Average            Average         Exercisable at         Average
     Exercise            at December 31,           Remaining          Exercise          December 31,         Exercise
      Prices                   2002              Contract Life          Price               2002               Price
-------------------    ---------------------     ---------------    --------------    ------------------    ------------

<S>                               <C>                     <C>        <C>                       <C>           <C>
$             0.60                200,000                 1.0        $      0.60               200,000       $     0.60
</TABLE>


The person who was the president of the Company from January through September
2002 provided services to the Company without compensation. For the nine month
ended September 30, 2002, management estimated the value of these services to be
$10,000. In accordance with the accounting treatment proscribed in the SEC Staff
Accounting Bulletin Topic 5-T, the Company recorded an expense of $10,000
representing the value of these services provided. An offsetting entry was
recorded to additional paid-in capital. In September 2002 the Company hired a
new president who was being compensated.


NOTE 15 - RELATED PARTY TRANSACTIONS - NOT DECSRIBED ELSEWHERE / CONCENTRATIONS

The Company borrowed $645,000 from Continental Southern Resources, Inc. ("CSOR")
in August through December 2002 with interest payable at 10% per annum. The loan
amount payable at December 31, 2002 was $295,000. The note plus accrued interest
are payable on demand. The Company and CSOR have one common director who also
serves as president of the Company.

CSOR owned 319,000 shares of the Company representing approximately 2% of
ownership in the Company at December 31, 2002.

The Company entered into an agreement for investors services with ESC Consulting
Services Corp. on May 31, 2002. This agreement is for 36 months with a total
compensation of $216,000, to be paid $6,000 on the first day of each month. The
Company incurred $48,000 of consulting expense as of December 31, 2002. The
president of ESC Consulting sits on the board of directors of the Company.

In January 2003, Mark Bush, the president of Touchstone Resources USA, Inc.
became a director of the Company. Mr. Bush is also the managing member of LS
Gas, LLC, which is the general partner of Louisiana Shelf Partners, LP.


NOTE 16 - OPERATING LEASES

On September 9, 2002, the Company entered into a lease agreement for office
space. The lease period is for one year and rent is $18,000 annually. As of
December 31, 2002, the Company paid $6,000 of rent expense for the office lease.

NOTE 17- COMPREHENSIVE LOSS

Excluding net loss, the Company's source of comprehensive loss is from the net
unrealized loss on its marketable debt securities, which are classified as
available-for-sale.



                                      F-27
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 18 - COMMITMENT AND CONTINGENCIES

General
--------

The oil and gas industry is regulated by federal, state and local authorities.
In particular, gas and oil production operations and economics are affected by
environmental protection statutes, tax statutes and other laws and regulations
relating to the petroleum industry, as well as changes in such laws, changing
administrative regulations and the interpretations and application of such laws,
rules and regulations. The Company believes it is in compliance with all
federal, state and local laws, regulations, and orders applicable to the Company
and its properties and operations, the violation of which would have a material
adverse effect on the Company or its financial condition.

Operating Hazards And Insurance
-------------------------------

The gas and oil business involves a variety of operating risks, including the
risk of fire, explosions, blow-outs, pipe failure, abnormally pressured
formation, and environmental hazards such as oil spills, gas leaks, ruptures or
discharges of toxic gases, the occurrence of any of which could result in
substantial losses to the Company due to injury or loss of life, severe damage
to or destruction of property, natural resources and equipment, pollution or
other environmental damage, cleanup responsibilities, regulatory investigation
and penalties and suspension of operations.

There can be no assurance that insurance, if any, will be adequate to cover any
losses or exposure to liability. Although the Company believes certain policies
obtained by operators provide coverage in scope and in amounts customary in the
industry, they do not provide complete coverage against all operating risks. An
uninsured or partially insured claim, if successful and of significant
magnitude, could have a material adverse effect on the Company and its financial
condition via its contractual liability to the Prospect.

Potential Loss Of Oil And Gas Interests/ Cash Calls
---------------------------------------------------

The Company is subject to cash calls related to its various investments in oil
and gas prospects.

Subsidiary, PH Gas, L.P. will have cash calls in the first half of 2003. The
total cash call of at least $3,500,000 will result in $341,600 to PH Gas, L.P.
based on its 9.76% interest. If the Company does not pay its share of cash calls
it will forfeit all or some of its rights in certain of its interests in the
Prospects and any related profits. The Company's share of additional exploratory
and drilling cost over the next year is uncertain at this time. If one or more
of the other members of the prospect fail to pay their share of the prospect
costs - the Company may need to pay additional funds to protect its investment.


                                      F-28
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 19 - SUBSEQUENT EVENTS

On January 15, 2003, the Company purchased a 99% Limited Partnership Interest in
CSR-WAHA Partners, LP, a Delaware Limited Partnership (the "LP Interest") from
Continental Southern Resources, Inc. The purchase price was $2,000,000 which was
to be paid by $150,000 due upon execution of the agreement, a $1,500,000
promissory note due on April 30, 2003, and 600,000 shares of the common stock of
the Company.

On January 15, 2003, the Company entered into a consulting agreement with Rhodes
Ventures, S.A. The agreement is for a twelve month period and the Company will
pay consideration in the form of options to purchase 400,000 shares of the
Company's common stock at $0.65 per share payable upon the closing of a future
equity transaction.

On January 23, 2003, the Company entered into a public relations agreement with
TKO International, Inc. The agreement is for a three month period ending on
April 30, 2003 at a fee of $20,000.

On February 10, 2003, the Company entered into a public relations agreement with
Corporate Development Associates, LLC. The agreement is for an unspecified
period at a fee of $217,000 of which $50,000 was paid as of December 31, 2002.

During January, February, and March the Company received funds through demand
promissory notes totaling $152,000 from an unrelated party.

On February 21, 2003, the Company received a loan in the form of a promissory
note from an unrelated party in the amount of $30,000.

On February 21, 2003, the Company's Board of Directors designated 5,538,461 of
the 10,000,000 shares of preferred stock to be non-voting Series A 10%
Convertible Preferred Stock. In the event of liquidation of the Company the
preferred stock is convertible into shares of common stock. The preferred stock
is redeemable at any time by the Company at a rate of $0.65 per share. On
February 28, 2006 all of the series A preferred stock is to be redeemed at $0.65
per share. The holders of shares of this stock will be entitled to receive
dividends at a rate of 10% per annum which accrue from the date of issuance of
each share. The dividends are payable semi-annually only if declared by the
Board of Directors. These dividends have preference over common stock cash
dividends. The preferred stock is convertible into shares of common stock at the
option of the holder under terms described in the Certificate of Designation of
this preferred stock.

On February 21, 2003, the Company entered into an investment agreement with
Ocean Resources Capital Holding PLC ("ORCH"). In accordance with the agreement,
the Company issued 5,583,461 shares of its Series A 10% Convertible Preferred
Stock in exchange for 4,390,00 ordinary shares of ORCH, along with warrants to
purchase an additional 4,390,000 shares. ORCH trades on the London Stock
Exchange in the AIM market. The Company also entered into a loan facility
agreement with ORCH whereby the Company intends on borrowing $600,000 which is
to be secured by the Company's shares of ORCH. The loan matures on May 31, 2003
and bears interest at LIBOR plus 2%.

On January 31, 2003, the Company issued options to purchase 100,000 shares of
common stock at an exercise price of $0.65 per share to each of two directors of
the Company in connection with their appointments to serve. The options are
fully vested and terminate on the earlier of three years from the date of grant
or three months after cessation of service to the Company.

On January 30, 2003, the Company issued options to purchase 200,000 shares of
common stock at an exercise price of $0.65 per share to the Chief Executive
Officer, also a Director of the Company. The options are immediately exercisable
and terminate on the earlier of three years from the date of grant or three
months after cessation of service to the Company.

                                      F-29
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 20 -  SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest expense and income taxes for 2002 and 2001 were as
follows:

                                               2002           2001
                                            -------------  ------------

           Interest                          $    31,973   $         -
                                            =============  ============

           Income taxes, net                 $         -   $         -
                                            =============  ============



The Company received 207,044 shares of CyRx Corporation common stock in partial
settlement of a note receivable (see Note 5).


NOTE 21 - SUPPLEMENTAL OIL AND GAS DISCLOSURES - UNAUDITED

OIL AND GAS RESERVES

The determination of oil and gas reserves is highly complex and interpretive.
The estimates are subject to continuing changes as additional information
becomes available.

Proved oil and gas reserves are the estimated quantities of crude oil, natural
gas, and natural gas liquids, which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. Proved development
oil and gas reserves are those reserves expected to be recovered through
existing wells with existing equipment and operating methods. The reserve data
is based on studies prepared by an outside petroleum engineer. All proved
developed reserves of oil and gas are located in Texas.

The following table presents estimates of the Company's net proved developed oil
and gas reserves:

<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                       --------------------------------------
                                                                             2002                 2001
                                                                       ------------------   -----------------

<S>                                                                             <C>             <C>
         Purchase of proved developed reserves (bbls), in place                 15,858                   -
         Production                                                             (6,436)                  -
         Extension of reservoir                                                      -                   -
         Revisions of previous estimates                                             -                   -
                                                                       ------------------   -----------------

         Proved developed reserves (bbls), end of year                           9,422                   -
                                                                       ==================   =================

         Equity in reserves in equity method investees                           3,128                   -
                                                                       ==================   =================
</TABLE>


                                      F-30
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements

NOTE 21 - SUPPLEMENTAL OIL AND GAS DISCLOSURES - UNAUDITED (Continued)

Standardized Measure Of Discounted Future Net Cash Flows (Unaudited)
-------------------------------------------------------------------

SFAS No. 69, "Disclosure about Oil and Gas Producing Activities" prescribes
guidelines for computing a standardized measure of future net cash flows and
changes therein relating to estimated proved reserves. The Company has followed
these guidelines, which are briefly discussed below.

Future cash inflows and future production and development costs are determined
by applying year-end prices and costs to the estimated quantities of oil and gas
to be produced. Estimated future income taxes are computed using current
statutory income tax rates for where production occurs. The resulting future net
cash flows are reduced to present value amounts by applying a 10% annual
discount factor.

The assumptions used to compute the standardized measure are those prescribed by
the Financial Accounting Standards Board and, as such, do not necessarily
reflect the Company's expectations for actual revenues to be derived from those
reserves nor their present worth. The limitations inherent in the reserve
quantity estimation process, as discussed previously, are equally applicable to
the standardized measure computations since these estimates are the basis for
the valuation process.

The following summary sets forth the Company's future net cash flows relating to
proved oil and gas reserves based on the standardized measure prescribed in
Statement of Financial Accounting Standards No. 69.

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                      ------------------------------------
                                                                              2002                2001
                                                                      ------------------  ----------------

<S>                                                                   <C>                 <C>
       Future cash inflows                                            $       214,868     $             -
       Future production costs                                                (41,497)                  -
       Future development costs                                                (9,922)                  -
       Future income tax expense                                                    -                   -
                                                                      ------------------  ----------------

       Future net cash flows (undiscounted)                                   163,449                   -

        Annual discount of 10% for estimated timing                            (8,794)                  -
                                                                      ------------------  ----------------

        Standardized measure of future net                            $       154,655     $             -
                                                                                                        -
                                                                      ==================  ================

        Equity in standardized measure of equity method investees     $        52,001     $             -
                                                                      ==================  ================
</TABLE>

                                      F-31
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements


NOTE 21 - SUPPLEMENTAL OIL AND GAS DISCLOSURES - UNAUDITED (Continued)

Changes In Standardized Measure (Unaudited)
------------------------------------------

The following are the principal sources of change in the standardized measure of
discounted future net cash flows at December 31:

<TABLE>
<CAPTION>

                                                                           2002                 2001
                                                                       ----------------   ---------------

<S>                                                                     <C>                 <C>
         Standardized measure, beginning of period                      $          -        $          -
         Net changes in prices and production costs                                -                   -
         Future development costs                                                  -                   -
         Revisions of previous quantity estimates                                  -                   -
         Extension of reservoir                                                    -                   -
         Sale of reserves in place                                                 -                   -
         Accretion of discount                                                     -                   -
         Changes in income taxes, net                                              -                   -
         Purchased reserves                                                  154,655                   -
                                                                       ----------------   ---------------

         Standardized measure, end of period                            $    154,655         $         -

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

         Equity in standardized measure of equity method investees      $     52,001         $         -
                                                                       ================   ===============
</TABLE>


The following schedule lists the total assets, liabilities and results of
limited partnerships which the Company is invested in at December 31, 2002:
<TABLE>
<CAPTION>

                                                                                 Touchstone
                                                                               Resources-2001
                                                                                  Hackberry           Louisiana Shelf
                                                         PH Gas, LP          Drilling Fund, LP         Partners, LP
                                                     ---------------------  ----------------------  --------------------

<S>                                                    <C>                   <C>                     <C>
Total Assets                                           $        506,160      $        3,093,936      $      2,623,250
                                                     =====================  ======================  ====================

Total Liabilities                                                50,000                       -               374,077

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

Results of Operations
   Sales                                                              -                 556,840                     -
   Gross profit                                                       -                 488,478                     -
   Net loss                                            $           (340)     $         (645,680)     $        (14,328)

</TABLE>




                                      F-32
<PAGE>

                               BPK RESOURCES, INC.
                          (A DEVELOPMENT STAGE ENTITY)
                   Notes to Consolidated Financial Statements



NOTE 21 - SUPPLEMENTAL OIL AND GAS DISCLOSURES - UNAUDITED (Continued)

The following is a summary of costs incurred by the equity method of investment:

<TABLE>
<CAPTION>
                                                                             December 31, 2002
                                                     ------------------------------------------------------------------
                                                                                 Touchstone
                                                                               Resources-2001
                                                                                 Hackberry           Louisiana Shelf
                                                        PH Gas, LP          Drilling Fund, LP          Partners, LP
                                                     --------------------  -----------------------  -------------------

<S>                                                   <C>                   <C>                      <C>
Proved property acquisition costs                     $              -      $           400,000      $             -
Unproved acquisition costs                                     130,000                        -              230,423
Development costs                                                    -                        -                    -
Capitalized acquisition costs                                   34,158                   33,646                1,881

Accumulated depreciation, depletion, amortization,
   and valuation allowance                                           -                 (116,208)                   -
                                                     --------------------  -----------------------  -------------------

Net Capitalized Costs                                 $        164,158      $           317,438      $       232,304
                                                     ====================  =======================  ===================
</TABLE>


There were no equity investments in 2001.


                                      F-33





<PAGE>