FORM 20-F

[ ] Registration Statement Pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
FOR THE FISCAL YEAR ENDED AUGUST 31, 2001

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the transition period from _________ to _________

Commission file number: 000-30196

TRIMARK OIL & Gas Ltd.
(Exact name of Registrant as specified in its charter)

TRIMARK OIL & Gas Ltd.
(Translation of Registrant's name into English)

YUKON TERRITORY, CANADA
(Jurisdiction of incorporation or organization)

1305 - 1090 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA, V6E 3V7
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.

COMMON STOCK, NO PAR VALUE
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

NOT APPLICABLE
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

20,488,016 COMMON SHARES AS OF AUGUST 31, 2001

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
----------- ---------

Indicate by check mark which financial statement item the registrant has elected
to follow.

Item 17 X Item 18 Page 1 of 75
--------- -----------

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GENERAL INFORMATION:

UNLESS OTHERWISE INDICATED, ALL REFERENCES HEREIN ARE TO CANADIAN DOLLARS.

GLOSSARY

The following is a glossary of oil and gas terms used in this report:

anticlines Underground mountain-shaped strata covered with caprock or
an impervious layer.

BBL or barrel 34.972 Imperial gallons or 42 U.S. gallons.

BCF One billion cubic feet.

BOE Barrels of oil equivalent.

BOPD Barrels of oil per day.

BW Barrels of water.

BWPD Barrels of water per day.

farm-in Acquisition of all or part of the operating rights from the
working interest owner to an assignee, by the assumption of
all or some of the burden of development to earn an interest
in the property. The vendor usually retains an overriding
royalty but may retain any type of interest.

farm-out Transfer of all or part of the operating rights from the
working interest owner to an assignee, who assumes all or
some of the burden of development in return for an interest
in the property. The assignor usually retains an overriding
royalty but may retain any type of interest.

gross acres The total number of acres in which the Company holds a
working interest or the right to earn a working interest.

gross reserves The total reserves estimated to be economically recoverable.

gross wells The total number of wells in which the Company has a working
interest.

isopach maps Maps showing variations in the thickness of a particular
sedimentary bed and the interval or spacing between one
sedimentary bed and another.

liquids Crude oil and natural gas liquids.

MBO One thousand barrels of oil.

MCF One thousand cubic feet.

MCFE One thousand cubic feet equivalent.

md Millidarcies - a term used to measure the relative ease with
which oil and gas can flow.

MMBOE One million barrels of oil equivalent.

MMCF One million cubic feet.

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MMCFE One million cubic feet equivalent.

MMCF/D One million cubic feet per day.

net acres The gross acres multiplied by the percentage working
interest therein owned or to be owned by the Company.

net reserves The Company's lessor royalty, overriding royalty, and
working interest share of reserves from the properties,
after deduction of all freehold, and overriding royalties
payable to others.

net revenue The percentage interest in which the lessor has the right to
interest receive a specified fractional share of the mineral produced
from the property or value thereof.

net wells The gross wells multiplied by the percentage working
interest therein owned or to be owned by the Company.

NGLs Natural gas liquids.

present value The present value of estimated future net revenues computed
by applying current prices of oil and gas reserves to
estimated future production of proved oil and gas reserves
as of the date of the latest balance sheet presented, less
estimated future expenditures (based on current costs) to be
incurred in developing and producing the proved reserves
computed using a discount factor of ten percent and assuming
continuation of existing economic conditions.

proved oil and Proved oil and gas reserves are the estimated quantities of
gas reserves 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,
i.e. prices and costs as of the date the estimate is made.
Prices include consideration of changes in existing prices
provided only by contractual arrangements, but not on
escalations based upon future conditions.

(i) Reservoirs are considered proved if economic
producibility is supported by either actual production
or conclusive formation test. The area of a reservoir
considered proved includes:

(A) that portion delineated by drilling and defined by
gas-oil and/or oil-water contacts, if any; and

(B) the immediately adjoining portions not yet
drilled, but which can be reasonably judged as
economically productive on the basis of
available geological and engineering data. In
the absence of information on fluid contacts, the
lowest known structural occurrence of hydrocarbons
controls the lower proved limit of the reservoir.

(ii) Reserves which can be produced economically through
application of improved recovery techniques (such as
fluid injection) are included in the "proved"
classification when successful testing by a pilot
project, or the operation of an installed program in
the reservoir, provides support for the engineering
analysis on which the project or program was based.

-3-

(iii)Estimates of proved reserves do not include the
following:

(A) oil that may become available from known
reservoirs but is classified separately as
"indicated additional reserves",

(B) crude oil, natural gas, and natural gas liquids,
the recovery of which is subject to reasonable
doubt because of uncertainty as to geology,
reservoir characteristics, or economic factors,

(D) crude oil, natural gas, and natural gas liquids,
that may be recovered from oil shales, coal,
gilsonite and other such sources.

proved developed Reserves that can be expected to be recovered through
oil and gas existing wells with existing equipment and operating
reserves methods. Additional oil and gas expected to be obtained
through the application of fluid injection or other improved
recovery techniques for supplementing the natural forces and
mechanisms of primary recovery should be included as "proved
developed reserves" only after testing by a pilot project or
after the operation of an installed program has confirmed
through production response that increased recovery will be
achieved.

proved undeveloped Reserves that are expected to be recovered from new wells on
reserves undrilled acreage, or from existing wells where a relatively
major expenditure is required for recompletion. Reserves on
undrilled acreage shall be limited to those drilling units
offsetting productive units that are reasonably certain of
production when drilled. Proved reserves for other undrilled
units are claimed only where it can be demonstrated with
certainty that there is continuity of production from the
existing productive formation. Under no circumstances are
estimates for proved undeveloped reserves attributable to
any acreage for which an application of fluid injection or
other improved recovery technique is contemplated, unless
such techniques have been proved effective by actual tests
in the area and in the same reservoir.

proved properties Properties with proved reserves.

unproved properties Properties with no proved reserves.

reversionary A portion of an economic interest that will be returned to
interest its former owner after a predetermined amount of production
or income has been produced.

undeveloped Lands on which there are no current reserves assigned.
acreage

water flooding The secondary recovery method in which water is forced down
injection wells laid out in various patterns around the
producing wells. The water injected displaces the oil and
forces it to the producing wells.

working interest The interest held by a company in an oil or natural gas
property, which interest normally bears its proportionate
share of the costs of exploration, development, and
operation as well as any royalties or other production
burdens.

-4-

workover A major remedial operation on a completed well to restore,
maintain, or improve the well's production. Workovers use
workover rigs and can take many forms such as acidizing or
fracing the well or removal of sand or paraffin buildup. The
term workover is also used for deepening an existing well or
plugging back to produce from a shallower formation.

Forward Looking Statements

Pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 (the "PSLRA"), the Company cautions readers regarding forward
looking statements found in the followin g discussion and elsewhere in this
registration statement and in any other statement made by, or on the behalf of
the Company, whether or not in future filings with the SEC. Forward looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by or on behalf of the Company. The Company
disclaims any obligation to update forward looking statements. Readers should
also understand that under Section 27A(b)(2)(D) of the Securities Act, and
Section 21E(b)(2)(D) of the Securities Exchange Act, the "safe harbor"
provisions of the PSLRA do not apply to statements made in connection with an
initial public offering.

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PART I

ITEM 1. DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.
- --------------------------------------------------------------------------------

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
- --------------------------------------------------------------------------------

Not applicable.

ITEM 3. KEY INFORMATION.
- --------------------------------------------------------------------------------

Selected Financial Data

The selected financial data of the Company for the years ended August 31, 2001,
2000 and 1999, was derived from the financial statements of the Company which
have been audited by D & H Group (formerly Dyke & Howard), independent Chartered
Accountants, as indicated in their report which is included elsewhere in this
report. The selected financial data set forth for the years ended August 31,
1998 and 1997 are derived from the Company's audited financial statements, not
included herein.

The information in the following table was extracted from the more detailed
consolidated financial statements and related notes included herein and should
be read in conjunction with such financial statements and with the information
appearing under the heading "Item 9. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Reference is made to Note 11 of the Company's consolidated financial statements
included herein for a discussion of the material differences between Canadian
generally accepted accounting principles ("GAAP") and U.S. GAAP, and their
effect on the Company's financial statements.

($ in 000, except per share data)
-----------------------------------------------------------
Year Ended August 31,
-----------------------------------------------------------
2001 2000 1999 1998 1997

Revenues $635 $398 $143 $232 $156
Production $185 $155 $132 $107 $81
Depreciation, depletion and impairment $5,168 $78 $1,703 $1,983 $49
General and administrative $330 $462 $350 $217 $193
Net income (loss) $(5,048) $(297) $(2,042) $(2,076) $(167)
Income (loss) per share $(0.29) $(0.02) $(0.40) $(0.84) $(0.16)
Weighted average number of shares 17,361 14,771 5,058 2,458 1,059
Dividends per share $0.00 $0.00 $0.00 $0.00 $0.00

Working capital (deficiency) $(547) $1,262 $1,338 $(471) $282
Resource assets $7,022 $7,795 $5,096 $2,169 $801
Other assets $619 $773 - - -
Shareholders' equity $7,094 $9,830 $6,434 $1,698 $1,083
Total assets $8,168 $10,137 $6,698 $2,225 $1,289

Adjustment to United States Generally Accepted Accounting Principles

The consolidated financial statements of the Company have been prepared in
accordance to Canadian GAAP which differ in certain material respects from US
GAAP. Material differences between Canadian and US GAAP and their effect on the
Company's consolidated financial statements are summarized in the tables below.

-6-

Consolidated Statement of Loss

2001 2000 1999
$ $ $

Net loss as reported under Canadian GAAP (5,048,280) (296,849) (2,042,191)
Adjustments for related party
transactions (ii) 815,793 - 450,084
Stock-based compensation (iv) (316,069) (98,126) (735,393)
Other compensation expense (vii) (172,720) (134,742) (31,600)
----------- ----------- -----------
Net loss under US GAAP (4,721,276) (529,717) (2,359,100)
=========== =========== ===========
Weighted average number of
common shares outstanding (i) 17,361,325 15,012,218 5,296,479
=========== =========== ===========
Loss per share under US GAAP (0.27) (0.04) (0.45)
=========== =========== ===========

Consolidated Balance Sheet

2001 2000
$ $

Total assets under Canadian GAAP 8,168,171 10,136,627
Adjustments for related party transactions (ii) (1,928,229) (2,744,022)
Deferred tax asset (v) 2,490,000 1,651,821
Less: Valuation allowance (v) (2,490,000) (1,651,821)
----------- -----------
Total assets under US GAAP 6,239,942 7,392,605
=========== ===========
Total liabilities under Canadian GAAP 1,073,829 306,565
----------- -----------
Total liabilities under US GAAP 1,073,829 306,565
=========== ===========
Total shareholders' equity under Canadian GAAP 7,094,342 9,830,062
Adjustments for related party transactions (ii) (1,928,229) (2,744,022)
----------- -----------
Total shareholders' equity under US GAAP 5,166,113 7,086,040
=========== ===========

(i) Earnings per Share

UnderUS GAAP outstanding special warrants are included in the calculation
of loss per share.

(ii) Capital Contributions with Respect to Related Party Transactions

During the year ended August 31, 1999, the Company acquired and disposed
of certain petroleum interests with Hilton Inc. for a combination of
monetary and non-monetary consideration.

US GAAP requires that certain transfers of non-monetary assets to a
company by its promoters or shareholders, in exchange for stock, should
generally be recorded at the transferor's historical cost basis, whereas
under Canadian GAAP, transfers of non-monetary assets may be recorded
based on the fair value of either the stock issued or the assets acquired
under certain circumstances. Under Canadian GAAP these transactions were
recorded at their fair values. The transactions have been adjusted to
reflect the transactions based on the historical cost basis.

The net loss under US GAAP has also been adjusted for the subsequent
amortization and impairment charges of a portion of these petroleum
interest acquisitions costs.

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(iii) Ceiling test on petroleum interests

US GAAP requires that the net book value of proved petroleum interests
not exceed the sum of the present value of estimated future net revenues
(determined using current prices of petroleum production less estimated
future expenditures to be incurred in developing and producing the proved
reserves, discounted at ten percent). This ceiling test was performed
effective August 31, 2001 and it was determined that no additional
write-down of proved petroleum interests was necessary.

(iv) The Company grants stock options which reserves common shares for
issuance to employees and directors. Under Canadian GAAP, the issuance of
stock options is not recognized for accounting purposes. Under US GAAP,
the issuance of stock options requires an assessment to determine stock
based compensation. Accordingly, the Company has applied the provisions
of Financial Account Standards ("SFAS") 123 Accounting for Stock-Based
Compensation to calculate stock-based compensation under US GAAP using
the fair value method.

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
assumptions used for grants in 2001, 2000 and 1999:

2001 2000 1999
------------------ ------------------ -----------------

Risk-free interest rate 4.81% - 6.47% 5.63% - 5.79% 6.25% - 7.5%
Expected volatility 124% 87% 89%
Expected lives 3 years 2 - 3 years 3 years

(v) Income Tax

Under Canadian GAAP, deferred tax assets relating to the potential
benefit of income tax loss carryforwards are not recognized unless there
is virtual certainty of realization of the benefit. US GAAP provides
similar treatment, but requires the benefit be recognized and a valuation
allowance be recognized to fully offset the deferred tax asset.

As at August 31, 2001, the Company has fully reserved the $2,490,000 tax
benefit of operating loss carryforwards, by a valuation allowance of the
same amount, because the likelihood of realization of the tax benefit
cannot be determined. Of the total tax benefit, $838,179 is attributable
to the year ended August 31, 2001.

(vi) Private Placements of Common Stock and Special Warrants with Related
Parties

US GAAP requires disclosure of private placements conducted by the
Company where directors and officers of the Company are participants.
During the year ended August 31, 2001, directors, officers and companies
controlled by the directors or officers acquired 2,284,000 shares or
special warrants (2000 - 1,387,794; 1999 - 1,580,000) of the Company,
pursuant to private placements conducted by the Company, for cash
proceeds of $1,223,360 (2000 - $1,116,952; 1999 - $1,264,000).

(vii) Private Placements of Common Stock

The Company conducts the majority of its equity financings pursuant to
private placements. Under the policies of the Canadian Venture Exchange,
on which the Company's common stock is listed, the Company may provide a
discount off the market price of the Company's common stock. US GAAP does
not permit a discount from the market price. US GAAP requires the
recognition of the market value of the Company's common stock as a credit
to share capital, with a charge to operations for the portion of the
discount relating to equity financings conducted with officers and
directors of the Company and a charge to shareholders' equity, as a
capital distribution, for the discount relating to the remaining portion
of the equity financings.

-8-

and share capital, as at August 31, 2001 would increase by $961,402 (2000
- $647,982). There is no net change to shareholders' equity.

The Company's consolidated statements of cash flow comply with US GAAP.

New Technical Pronouncements

In September 2000, SFAS No. 140 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - A Replacement of FASB
Statement No. 125" was issued. Adoption of SFAS No. 140 is not expected to have
an impact on the Company's financial statements.

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 141
"Business Combinations" and SFAS 142 "Goodwill and Other Intangible Assets".
SFAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for under the purchase method. For all business combinations for which
the date of acquisition is after June 30, 2001, SFAS 141 also establishes
specific criteria for the recognization of intangible assets separately from
goodwill and requires unallocated negative goodwill to be written off
immediately as an extraordinary gain rather than deferred and amortized. SFAS
142 changes the accounting for goodwill and other intangible assets after an
acquisition. The most significant changes made by SFAS 142 are: 1) goodwill and
intangible assets with indefinite lives will no longer be amortized; 2) goodwill
and intangible assets with indefinite lives must be tested for impairment at
least annually; and 3) the amortization period for intangible assets with finite
lives will no longer be limited to forty years. The Company does not believe
that the adoption of these statements will have a material effect on its
financial position, results of operations, or cash flows.

In June 2001, the FASB also approved for issuance SFAS 143, "Asset Retirement
Obligations." SFAS 143 establishes accounting requirements for retirement
obligations associated with tangible long-lived assets, including (1) the timing
of the liability recognition, (2) initial measurement of the liability, (3)
allocation of assets retirement cost to expense, (4) subsequent measurement of
the liability, and (5) financial statement disclosure. SFAS 143 requires that an
asset retirement cost should be capitalized as part of the cost of the related
long-lived asset and subsequently allocated to expense using a systematic and
rational method. The adoption of SFAS 143 is not expected to have a material
effect on the Company's financial position, results of operations, or cash
flows.

Exchange Rate History

The following table sets forth the average exchange rate for one Canadian dollar
expressed in terms of one U.S. dollar for the fiscal years ended August 31,
2001, 2000, 1999, 1998 and 1997.

Period Average
- ------ -------

September 1, 2000 - August 31, 2001 0.6537
September 1, 1999 - August 31, 2000 0.6805
September 1, 1998 - August 31, 1999 0.6682
September 1, 1997 - August 31, 1998 0.6901
September 1, 1996 - August 31, 1997 0.7296

The following table sets forth high and low exchange rates for one Canadian
dollar expressed in terms of one U.S. dollar for the four-month period ended
December 31, 2001.

Month High Low
- ----- ---- ----

July 2001 0.6622 0.6472
August 2001 0.6547 0.6456
September 2001 0.6437 0.6330
October 2001 0.6418 0.6287
November 2001 0.6363 0.6241
December 2001 0.6396 0.6254

-9-

Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York.

The noon rate of exchange on December 31, 2001, reported by the United States
Federal Reserve Bank of New York for the conversion of Canadian dollars into
United States dollars was CDN$0.6279 (US$1.5925 = CDN$1.00).

Risk Factors

Due to the nature of the Company's business and the present stage of exploration
on its oil and gas prospects, the following risk factors apply to the Company's
operations:

Accumulated Losses

During the year ended August 31, 2001, the Company incurred a loss of
approximately $5.0 million, and as at August 31, 2001, the Company had an
accumulated deficit of approximately $12.4 million. To date the Company's oil
and gas production has not generated sufficient operating cash flows to provide
working capital for the Company's ongoing overhead, the funding of its petroleum
property acquisitions and the exploration and development of these properties.
There can be no assurances that the Company will be able to successfully develop
its properties and achieve profitability from its operations.

Exploration and Production Risks

The business of exploring for and producing oil and gas involves a substantial
risk of investment loss which even a combination of experience, knowledge and
careful evaluation may not be able to overcome. Drilling oil and gas wells
involves the risk that the wells will be unproductive or that, although
productive, the wells 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 in the event 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
the Company has interests. In addition, the marketability of oil and gas which
may be acquired or discovered, will be affected by numerous factors beyond the
control of the Company. 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. The extent of these factors cannot be accurately predicted, but any
one or a combination of these factors may result in the Company not receiving an
adequate return on invested capital. There is no assurance that additional crude
oil or natural gas in commercial quantities will be discovered by the Company.

Financing Risks

As at December 31, 2001, the Company had a working capital deficiency of
approximately $920,000. The Company has anticipated exploration and development
expenditures, completion costs and ongoing overhead for 2002 totaling
approximately $1.9 million.

The Company has primarily relied on the sale of its equity capital and
disposition of petroleum interests to fund the acquisition, exploration and
development of its petroleum properties. It has no assurance that additional
funding will be available to it for exploration and development of its projects
or to fulfil its obligations under any applicable agreements. There can be no
assurance that the Company will be able to generate sufficient operating cash
flow or obtain adequate financing in the future or that the terms of such
financing will be favorable. Failure to generate additional operating cash flow
or obtain additional financing could result in substantial dilution of the
Company's petroleum interests, or delay or indefinite postponement of further
exploration and development of its projects with the possible loss of such
properties.

As of the date of this report, the Company has initiated a number of
alternatives to provide funding for its commitments. See "Item 5. Operating and
Financial Review and Prospects - Liquidity and Capital Resources."

-10-

Non-Operator Status

At this stage of its business, the Company relies upon other project
participants to provide and complete all project operations and responsibilities
including operating, drilling, marketing and project administration. As a
result, the Company has only a limited ability to exercise control over a
significant portion of a project's operations or the associated costs of those
operations. The success of a project is dependent upon a number of factors that
are outside of the Company's area of expertise and project responsibilities.
These factors include: (1) the availability of favorable term leases and
required permitting for projects, (2) the availability of future capital
resources by the Company and the other participants for the purchasing of leases
and the drilling of wells, (3) the approval of other participants to the
purchasing of leases and the drilling of wells on the projects, and (4) the
economic conditions at the time of drilling, including the prevailing and
anticipated prices for oil and gas. The Company's reliance on other project
participants and its limited ability to directly control certain project costs
could have a material negative effect on the Company's receipt of expected rates
of return on the Company's investment in certain projects.

Uninsurable Risks

Although management believes the operator of any properties in which the Company
and its subsidiaries may acquire interests, will acquire and maintain
appropriate insurance coverage in accordance with standard industry practice,
the Company and its subsidiaries may suffer losses from uninsurable hazards or
from hazards which the operator has chosen not to insure against because of high
premium costs or other reasons. The Company and its subsidiaries intend to
continue to engage in the drilling of both exploratory and development wells.
Exploratory wells have much greater dry hole risk than do wells which are
drilled offsetting established production. The Company and its subsidiaries may
become subject to liability for pollution, fire, explosion, blow-outs, cratering
and oil spills against which are in excess of coverages, if any, maintained by
the operator. Such events could result in substantial damage to oil and gas
wells, producing facilities and other property and personal injury. The payment
of any such liabilities may have a material, adverse effect on the Company's
financial position.

Anadarko, the operator of the East Lost Hills Joint Venture and the San Joaquin
Joint Venture, maintains for each well a US$20 million operator's control of
well and pollution coverage and US$30 million liability coverage on the ongoing
drill programs.

As of the date of this report the Company is not the operator of any of its
petroleum and natural gas interests and does not maintain insurance coverage
relating thereto.

No Assurance of Titles

It is the practice of the Company 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, the Company will rely upon the judgment of oil and
gas lease brokers or landsmen who perform the field work in examining records in
the appropriate governmental office before attempting to place under lease a
specific mineral interest. This practice is widely followed 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 to be drilled to ensure there
are no obvious deficiencies in title to the well; however, neither the Company
nor the person or company acting as operator of the well will obtain counsel to
examine title to such spacing unit until the well is about to go into
production. It frequently happens, as a result of such examinations, that
certain curative work must be done 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. To date the Company has not lost title to any of its oil and
gas leases, nor is it aware that any of its currently held properties is subject
to being lost as a result of faulty titles.

-11-

Environmental Regulations

In general, the exploration and production activities of the Company are subject
to certain federal, state and local laws and regulations relating to
environmental quality and pollution control. Such laws and regulations increase
the costs of these activities and may prevent or delay the commencement or
continuance of a given operation. Compliance with these laws and regulations has
not had a material effect on the Company's operations or financial condition to
date. Specifically, the Company is subject to legislation regarding emissions
into the environment, water discharges, and storage and disposition of hazardous
wastes. In addition, legislation has been enacted which requires well and
facility sites to be abandoned and reclaimed to the satisfaction of state
authorities. However, such laws and regulations are frequently changed and the
Company is unable to predict the ultimate cost of compliance. Generally,
environmental requirements do not appear to affect the Company any differently
or to any greater or lesser extent than other companies in the industry.

The Company believes that its operations comply, in all material respects, with
all applicable environmental regulations.

Governmental Regulations

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 the Company's cost of doing business and, consequently,
affects its profitability. There is no assurance that laws and regulations
enacted in the future will not adversely affect the oil and gas industry.
However, since these regulations generally apply to all oil and gas producers,
management of the Company believes that these regulations should not put the
Company at a material disadvantage to other oil and gas producers.

Most states in which the Company and its subsidiaries own and operate properties
have statutes, rules and regulations governing conservation matters including
the unitization or pooling of oil and gas properties, establishment of maximum
rates of production from oil and gas wells and the spacing of such wells.

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.

In addition to royalties paid to freehold 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. Payment of these taxes are in the normal course of operations in the
oil and gas industry and should not have a material impact on the Company's
financial condition.

Natural Gas and Oil Prices

In recent decades, there have been periods of both worldwide overproduction and
underproduction of hydrocarbons and periods of both increased and relaxed energy
conservation efforts. Such 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 crude oil has placed pressures on prices and has
resulted in dramatic price fluctuations even during relatively short periods of
seasonal market demand. The price of natural gas has exhibited market demand
fluctuations; however, because most of the natural gas consumed within the
United States is produced within the United States, the price of natural gas did
not historically exhibit the dramatic price fluctuations that crude oil prices
have experienced under conditions of high import levels. Recently, the price of
natural gas has fluctuated dramatically due to changes in demand and significant
fluctuations of supplies. The Company's financial results can be significantly
affected by prices received from production of oil and gas as commodity prices
fluctuate widely in

-12-

response to changing market forces. Specifically, a decrease in the price of oil
or gas may reduce the revenue the Company receives from its oil and gas
operations and/or may increase the Company's impairment or depletion expenses
for a given period. In addition, a decrease in price may cause a decrease in the
present value of the Company's estimated oil and gas reserves. Conversely, an
increase in the price of oil or gas may increase the revenue received from the
Company's oil and gas operations and/or may decrease the Company's impairment or
depletion expenses for a given period. An increase in price may cause an
increase in the present value of the Company's estimated oil and gas reserves.

Competition

The oil and gas industry is intensely competitive and the Company competes with
other companies which have greater resources. Many of such 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. Such
companies may be able to pay more for productive oil and natural gas properties
and exploratory prospects, and to define, evaluate, bid for and purchase a
greater number of properties and prospects than the Company's financial or human
resources permit. The Company's ability to acquire additional properties and to
discover reserves in the future will be dependent upon its ability to evaluate
and select suitable properties and to consummate transactions in a highly
competitive environment. There is also competition between the oil and gas
industry and other industries with respect to the supply of energy and fuel to
industrial, commercial and individual customers. There is no assurance that the
Company will be able to effectively compete against such companies.

Risks Associated With Management of Growth

Because of its small size, the Company desires to grow rapidly in order to
achieve certain economies of scale. Although there is no assurance that this
rapid growth will occur, to the extent that it does occur, it will place a
significant strain on the Company's financial, technical, operational and
administrative resources. As the Company expands its activities and increases
the number of projects it is evaluating or in which it is participating, there
will be additional demands on the Company's financial, technical and
administrative resources. The failure to continue to upgrade the Company's
technical, administrative, operating and financial control systems or the
occurrence of unexpected expansion difficulties, including the recruitment and
retention of geoscientists and engineers, could have a material adverse effect
on the Company's business, financial condition and results of operations.

Dependence upon Key Personnel

The success of the Company's operations and activities is dependent to a
significant extent on the efforts and abilities of its management. The loss of
services of any of its management could have a material adverse effect on the
Company. The Company has not obtained "key man" insurance for any of its
management.

Mr. Busby is the Chairman, President and Chief Executive Officer of the Company.
The loss of the services of Mr. Busby may adversely affect the business and
prospects of the Company. Mr. Busby's services are provided through DWB
Management Ltd. See "Item 7. Major Shareholders and Related Party Transactions -
Related Party Transactions."

Adequate Labor

Corporate accounting, management and administration are provided, in part, by
Chase Management Ltd. ("Chase"), a company owned by Mr. Nick DeMare, a director
of the Company. As of the date of this report, the Company does not employ any
personnel. In the event the Company needs to employ personnel, it will need to
recruit qualified personnel to staff its operations. The Company believes that
such personnel currently are available at reasonable salaries and wages in the
geographic areas in which the Company and its subsidiaries operate. There can be
no assurance, however, that such personnel will be available in the future. In
addition, it cannot be predicted whether the labor staffing at any of the
Company's projects will be unionized, which may result in potentially higher
operating costs.

Dividend Risks

-13-

board of directors on the Company on the basis of earnings, financial
requirements and other such conditions that may exist at that time.

Price Fluctuations: Share Price Volatility

In recent years, the securities markets in Canada have experienced a high level
of price and volume volatility, and the market prices of securities of many
companies, particularly junior resource exploration companies like the Company,
have experienced wide fluctuations which have not necessarily been related to
the operating performance, underlying asset values or prospects of such
companies. In particular, the per share price of the Company's common stock on
the Canadian Venture Exchange fluctuated from a low of $0.11 to a high of $1.07
during the 12-month period ending December 31, 2001 and closed at $0.14 on
December 31, 2001. There can be no assurance that these price fluctuations will
not continue to occur.

Currency Fluctuations

Presently, the Company's petroleum activities are conducted in the United States
and all petroleum revenues and expenditures are conducted in United States
dollars. To date, all equity financing conducted by the Company has been
conducted in Canadian dollars. The Company maintains its head office in
Vancouver, Canada, and may, from time-to- time, maintain cash holdings in
Canadian dollars. Recently the Canadian dollar has experienced a devaluation
against the United States dollar. Continued devaluation of the Canadian dollar
may have a material and adverse effect on the Company's operations.

Conflicts of Interest

Certain of the directors also serve as directors of other companies or have
significant shareholdings in other companies and, to the extent that such other
companies may participate in ventures in which the Company may participate, the
directors of the Company may have a conflict of interest in negotiating and
concluding terms relating to the extent of such participation. In the event that
such a conflict of interest arises at a meeting of the board of directors, a
director who has such a conflict will disclose the nature and extent of his
interest to the board of directors and abstain from voting for or against the
approval of such a participation or such terms.

In accordance with the laws of the Yukon Territory, the directors of the Company
are required to act honestly and in good faith with a view to the best interests
of the Company. In determining whether the Company will participate in a
particular program and the interest therein to be acquired by it, the directors
will primarily consider the degree of risk to which the Company may be exposed
and its financial position at that time.

See also "Item 7. Major Shareholders and Related Party Transactions - Related
Party Transactions."

Penny Stock Regulation

The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stock". Generally, penny stocks are equity
securities with a price of less than US$5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system). If the
Company's shares are traded for less than US$5 per share, as they currently are,
the shares will be subject to the SEC's penny stock rules unless (1) the
Company's net tangible assets exceed US$5,000,000 during the Company's first
three years of continuous operations or US$2,000,000 after the Company's first
three years of continuous operations; or (2) the Company has had average revenue
of at least US$6,000,000 for the last three years. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prescribed by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules require that prior to
a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. As a result, the holders of the Common Stock
may find it difficult to sell the Common Stock of the Company. These rules may
restrict the ability of brokers

-14-

to sell the common stock and may reduce the secondary market for the common
stock. A limited secondary market may result in a decrease in the shareholder
value and/or a partial or total loss of an investor's investment.

Enforcement of Legal Process

Service of process upon individuals or firms that are not resident in the United
States may be difficult to obtain within the United States. Some of the members
of the Board of Directors and senior management of the Company reside outside
the United States. Any judgment obtained in the United States against the
Company or such persons may not be collectible within the United States. The
Company has not appointed anyone to accept service of process on its behalf.

ITEM 4. INFORMATION ON THE COMPANY.
- --------------------------------------------------------------------------------

History and Development of the Company

Name and Incorporation

The head office and principal address of the Company is located at #1305 - 1090
West Georgia Street, Vancouver, British Columbia, V6E 3V7.

The Company was incorporated under the laws of British Columbia, Canada, under
the name of Golden Chance Resources Inc. on June 16, 1983. On December 14, 1993,
the Company was continued under the Business Corporations Act (Yukon Territory).
On the continuance the Company changed its authorized capital into "unlimited
common shares without par value." On June 16, 1997, the Company changed its name
to its current name, "Trimark Oil & Gas Ltd."

The Company's common shares were listed on the Vancouver Stock Exchange (the
"VSE") through November 28, 1999. Effective November 29, 1999, the VSE and the
Alberta Stock Exchange (the "ASE") merged and began operations as the Canadian
Venture Exchange (the "CDNX"). The merger of the VSE and the ASE to form the
CDNX has not had a significant impact on the Company's operations. The CDNX
classifies listed companies into two different tiers based on standards, which
include historical financial performance, stage of development, and financial
resources of the listed company. Tier I is the CDNX's premier tier and is
reserved for the CDNX's most advanced issuers with the most significant
financial resources. Tier I issuers benefit from decreased filing requirements
and improved service standards. The majority of the companies listed on the CDNX
are Tier II companies. The Company trades on the CDNX under the symbol "TMK" and
is classified as a Tier II company.

Effective August 7, 2000, the Company's common stock was listed for quotation on
the Over-the-Counter Bulletin Board operated by the National Association of
Securities Dealers under the symbol "TOGSF".

The Company has one wholly-owned subsidiary, Trimark Resources Inc. ("Trimark
Inc."), which was incorporated on June 4, 1993, under the laws of the state of
Colorado. Trimark Inc. has one wholly-owned subsidiary, Safari Petroleum LLC
("Safari"), a limited liability company formed on June 14, 1995, under the laws
of the state of Colorado. The Company, through Trimark Inc. and Safari, engages
in oil and gas activities in the United States.

The Company's corporate office is located at Suite 1305 - 1090 West Georgia
Street, Vancouver, British Columbia, V6E 3V7.

The Company's registered office is located at 3081 - 3rd Avenue, Whitehorse,
Yukon, Canada. The phone number of the Company's registered office is (867)
668-4405 and the corporate office is (604) 685-9316.

The Company does not have a registered agent in the United States.

Exploration Expenditures

-15-

has devoted its resources in developing its petroleum and natural gas prospects
in California, as described in "Item 4. Information on the Company - Material
Properties". The Company is continuing its participation in the exploration and
development of its California properties.

Business Overview

Since October 1990, the Company has been active in the business of acquiring,
exploring and developing oil and gas prospects in the United States. The
Company's principal assets are its interests in the East Lost Hills Joint
Venture, the San Joaquin Joint Venture and in Regional California. These assets
are currently at the exploration stage. The Company is concentrating its oil and
gas exploration efforts on these properties. These assets are described in
detail in "Item 4. Information on the Company - Material Properties."

-16-

[Trimark Prospect and Well Locations Map]

-17-

2002 Exploration Budget

As of the date of this report the Company has active exploration and development
projects ongoing in California. The Company anticipates that it could incur up
to $1.5 million (US$933,000) in exploration and development expenditures for the
2002 calendar year determined as follows:

1. East Lost Hills - the partners have agreed to side-track the ELH #4
well, at a cost of US$6 million and complete drilling of the ELH #9
well, projected at US$6 million. The Company anticipates its share of
drilling and completion costs to be approximately US$120,000. The
partners have also determined to drill a water disposal well, at a
cost of US$3.10 million, to facilitate increased production from the
ELH #1 well. The Company's share of this cost is US$31,000. No
additional budgets have been proposed by the operator. Depending on
the results from the current program, the Company anticipates that the
operator may propose to drill additional wells in 2002. No amounts
have been budgeted for any additional drilling. The Company's share of
exploration and development costs at East Lost Hills for 2002, is
estimated to be US$151,000.

2. San Joaquin - drilling commenced on the Pyramid Hills Prospect in
mid-November 2001 at a cost of US$14 million. The Company's share is
US$560,000.

3. Regional California - the Company anticipates that it will participate
in the drilling of a replacement well on the Basil Prospect. A
definitive date and budget has not yet been proposed by the operator.
However, management of the Company expects that the replacement well
will be drilled between July 2002 and September 2002 at a cost of
US$700,000, with the Company's share at US$222,000.

The $1.5 million budget assumes that all wells currently in progress and planned
will in fact all be drilled and completed. These projections and work schedules
are contingent on many factors, many of which are beyond the Company's control.
Work schedules can and will change based on results in the field. Actual costs
may vary significantly from current estimates. The estimates provided are
management's estimates of expenditures to be incurred.

Sales and Revenue Distribution

The Company sells its share of petroleum, natural gas and natural gas liquids
produced from its wells to a variety of purchasers at the wellhead in the United
States. All of its sales are conducted with unaffiliated customers. These
purchasers provide a ready market for all of the Company's production and pay
the local market price, which can fluctuate based upon prevailing market
conditions. Due to the number of purchasers in each area, management does not
believe that the loss of one or a number of purchasers would pose a significant
risk to the continuity of the Company's operations. The Company does not
maintain significant inventories of petroleum or natural gas liquids. There are
currently no plans by management to engage in any further oil and gas activities
in Canada.

Total revenues reported for fiscal 1999, 2000 and 2001, were as follows:

($ in 000)
--------------------------------------
Years Ended August 31,
--------------------------------------
2001 2000 1999
$ $ $
Oil and Gas Sales
- United States 521 203 136
---- ---- ----
Interest and Other
- United States 15 58 -
- Canada 99 137 7
---- ---- ----
114 195 7
---- ---- ----
Total Revenues 635 398 143
==== ==== ====

-18-

Government Regulation

Competitive Business Conditions, Competitive Position in the Industry and
Methods of Competition

The Company's petroleum and natural gas exploration activities in the state of
California are being undertaken in a highly competitive and speculative business
atmosphere. In seeking any other suitable petroleum and natural gas properties
for acquisition, the Company is competing with a number of other companies
located in the state of California and elsewhere, including large oil and gas
companies and other independent operators with greater financial resources.
Management does not believe that the Company's initial competitive position in
the petroleum and natural gas industry will be significant.

Management does not foresee any difficulties in procuring drilling rigs or the
manpower to run them in the area of its operations; however, several factors,
including increased competition in the area, may limit the availability of
drilling rigs, rig operators and related personnel and/or equipment; such an
event may have a significant adverse impact on the profitability of the
Company's operations.

Competition in the petroleum and natural gas exploration industry exists in the
form of competition to acquire the most promising acreage blocks and obtaining
the most favorable prices for transporting the product. The Company, and
ventures in which it participates, is relatively small compared to other
petroleum and natural gas exploration companies and may have difficulty
acquiring additional acreage and/or projects and arranging for the
transportation of product, in the event the Company, or ventures in which it
participates, is successful in its exploration efforts.

Governmental Regulations and Environmental Laws

The Company and any venture in which it participates, is required to obtain
permits for drilling oil or gas wells.

Exploration and production activities relating to oil and gas leases are subject
to numerous environmental laws, rules and regulations. The Federal Clean Water
Act requires the Company to construct a fresh water containment barrier between
the surface of each drilling site and the underlying water table.

Various federal, state and local laws and regulations covering the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, may affect the Company's operations and costs through their effect
on oil and gas exploration, development and production operations. Environmental
laws and regulations have changed substantially and rapidly over the last 20
years, and the Company anticipates that there will be continuing changes. Laws
and regulations protecting the environment have generally become more stringent
in recent years, and may in certain circumstances impose "strict liability,"
rendering a corporation liable for environmental damages without regard to
negligence or fault on the part of such corporation. Such laws and regulations
may expose the Company to liability for the conduct of operations or conditions
caused by others, or for acts of the Company which were in compliance with all
applicable laws at the time such acts were performed. Increasingly strict
environmental restrictions and limitations have resulted in increased operating
costs for the Company and other businesses throughout the United States, and it
is possible that the costs of compliance with environmental laws and regulations
will continue to increase. The modification of existing laws or regulations or
the adoption of new laws or regulations relating to environmental matters could
have a material adverse effect on the Company's operations. In addition, the
Company's existing and proposed operations could result in liability for fires,
blowouts, oil spills, discharge of hazardous materials into surface and
subsurface aquifers and other environmental damage, any one of which could
result in personal injury, loss of life, property damage or destruction or
suspension of operations.

The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, requires payments for cleanup of
certain abandoned waste disposal sites, even though such waste disposal
activities were undertaken in compliance with regulations applicable at the time
of disposal. Under the Superfund legislation, one party may, under certain
circumstances, be required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the legislation, if
payments cannot be obtained from other responsible parties. Other legislation
mandates cleanup of certain wastes at facilities that are currently being
operated. States also have regulatory programs that can mandate waste cleanup.
CERCLA authorizes the Environmental Protection Agency ("EPA") and, in some
cases, third parties to take actions in response to threats to the public health

-19-

or the environment and to seek to recover from the responsible classes of
persons the costs they incur. The scope of financial liability under these laws
involves inherent uncertainties.

It is not anticipated that the Company will be required in the near future to
expend amounts that are material in relation to its total capital expenditures
program by reason of environmental laws and regulations, but inasmuch as such
laws and regulations are frequently changed, the Company is unable to predict
the ultimate cost of compliance.

The Company believes it is presently in compliance with all applicable federal,
state or local environmental laws, rules or regulations; however, continued
compliance (or failure to comply) and future legislation may have an adverse
impact on the Company's present and contemplated business operations.

The foregoing is only a brief summary of some of the existing environmental
laws, rules and regulations to which the Company's business operations are
subject, and there are many others, the effects of which could have an adverse
impact on the Company. Future legislation in this area will no doubt be enacted
and revisions will be made in current laws. No assurance can be given as to what
effect these present and future laws, rules and regulations will have on the
Company's current and future operations.

Principal Oil and Gas Properties

Material Properties

East Lost Hills Joint Venture and San Joaquin Joint Venture, California

In February 1999, Berkley Petroleum Corp. ("Berkley") agreed to purchase from
Armstrong Resources LLC ("Armstrong") an interest in various oil and gas
prospects in the San Joaquin Basin. Neither Berkley or Armstrong are affiliates
of the Company, and to the best of the Company's knowledge Berkley and Armstong
are not affiliated with each other. In order to reduce its financial
commitments, Berkley allowed other companies to participate with it in the
acquisition. Hilton Petroleum Inc. ("Hilton Inc."), a wholly-owned subsidiary of
Hilton Petroleum Ltd. ("Hilton"), acquired an 11% interest of which 4% was
reserved for the Company. On February 26, 1999, the Company entered into an
agreement to acquire, for a purchase price of approximately $2,151,000
(US$1,450,000), a 4% capital interest (3% working interest) in the San Joaquin
Joint Venture from Hilton Inc. The agreement with Berkley and Armstrong requires
that the Company pay 4% of the costs on the first three wells ("capital
interest"), and 3% of the costs on all subsequent wells. The Company's share of
net revenues, if any, will be approximately 2.5% in the San Joaquin Joint
Venture ("net revenue interest"). The Company's agreement with Hilton Inc. was
on identical terms as Hilton Inc.'s agreement with Berkley other than a promote
fee of $74,170 (US$50,000) which has been capitalized as an acquisition cost.
The Company is obligated to fund its prorata share of the exploration costs.
Hilton is a public company which has certain directors and officers in common
with the Company.

As a condition of Berkley's acquisition of the San Joaquin Joint Venture
properties, Berkley acquired, on a reversionary basis, Armstrong's 17.5%
interest in the East Lost Hills Joint Venture. After a specified level of oil
and gas revenue is generated the 17.5% interest will be returned to Armstrong.
As part of the Company's acquisition of the 4% interest in the San Joaquin Joint
Venture, the Company acquired a 0.7% (4% of 17.5%) reversionary working interest
in the East Lost Hills Joint Venture. Of the approximately $2,151,000
(US$1,450,000) purchase price of the San Joaquin Joint Venture Interest and the
0.7% reversionary working interest, $1,038,000 (US$700,000) was allocated to the
0.7% reversionary working interest.

On March 8, 1999, the Company entered into an agreement to acquire, from Hilton
Inc., a 1% working interest in the East Lost Hills Joint Venture for
approximately $2,972,000 (US$2,000,000) and sold to Hilton Inc. its 0.7%
reversionary interest in the East Lost Hills Joint Venture at its recorded cost
of $1,038,000 (US$700,000). The 0.7% interest was sold in order to fund the
payment for the acquisition of the 1% working interest from Hilton Inc. The 1%
working interest acquired by the Company from Hilton Inc. does not revert to
Armstrong. The $1,038,000 proceeds from the sale were credited against the
$2,972,000 payable to Hilton Inc. Of the remaining $1,934,000 (US$1,300,000)
payable, $890,000 (US$600,000) was paid in cash and $1,044,000 (US$700,000) was
paid by the issuance of 1,160,000 of the Company's common shares at a deemed
price of $0.90 per share. The Company is also obligated to pay its proportionate
share of all on-going exploration activities. The Company's share of net
revenues, if any, will be approximately 0.80% in the East Lost Hills Joint
Venture.

-20-

The Company closed the acquisition of the San Joaquin Joint Venture and the East
Lost Hills Joint Venture in July 1999.

The San Joaquin Joint Venture and the East Lost Hills Joint Venture are both
situated in the oil-rich San Joaquin Basin, approximately 45 miles northwest of
Bakersfield.

As of August 31, 2001, the Company had recorded approximately $1.9 million in
leasehold acquisition costs and $1.8 million in exploration and development
expenditures on the East Lost Hills Joint Venture and $2.2 million in leasehold
acquisition costs and $1.1 million in exploration and development expenditures
on the San Joaquin Joint Venture.

Based on the current approved work schedule and the progress of the current
drilling program, management has budgeted US$151,000 for exploration and
development on the East Lost Hills Joint Venture and US$560,000 on the San
Joaquin Joint Venture.

Other Properties

Regional California

The Company participated in the generation, acquisition and exploration of oil
and gas projects in the San Joaquin Basin of California with California
Exploration Ltd. ("CalEx"). The Company's initial capital interest was 23.333%
which was increased to 31.666% effective December 1, 2000 and effective January
1, 2001, increased to 43.66668%. As of February 26, 2001 an oil and gas
exploration agreement was signed with CalEx.

Under the agreement, the Company, effective January 1, 2001, would reimburse
CalEx for its 43.66668% share of all costs associated with the generation of oil
and gas prospects including, but not limited to, overhead costs, geologic and
geophysical costs and lease acquisition costs. In addition, the Company agreed
to pay up to 43.66668% of drilling costs through completion and sales point for
the first well drilled on a specific prospect. For any subsequent well drilled
on a prospect or operating costs when operations commence, the Company would pay
up to 32.749% of the costs.

Other Assets

In addition to its petroleum interests, the Company held the following assets as
at December 31, 2001:

(a) a US$400,000 unsecured convertible note (the "ALPNET Note") dated June 2,
2000, issued by ALPNET, Inc. ("ALPNET"), a public Utah company trading on
the Over-the-Counter Bulletin Board. The ALPNET Note has a variable
interest rate of US prime plus 2%, payable on a quarterly basis. The
principal is repayable in three equal annual instalments commencing June 2,
2003. The Company has the right to convert all or any portion of the
outstanding principal into common stock of ALPNET, on the basis of US$2.22
per share. ALPNET has the right to pay the full amount, or any portion, of
the ALPNET Note prior to its maturity.

In connection with the ALPNET Note, ALPNET granted the Company a warrant to
purchase up to 90,090 common shares of ALPNET, at an exercise price of
US$3.33 per share, on or before June 2, 2002. The closing price of ALPNET's
common stock on December 31, 2001 was US$0.20.

SDL plc., through a tender offer, acquired control of ALPNET on or about
January 16, 2002 and is in the process of merging ALPNET into a
wholly-owned subsidiary of SDL plc.

On January 15, 2002, the Company, DNG Capital Corp., Donald W. Busby and
the Donald W. Busby 1999 Trust (collectively the "Noteholders") entered
into an agreement with SDL plc, to convert, with ten days' prior written
notice to SDL plc, up to US$200,000 in principal amount of ALPNET
promissory notes held by the Noteholders into 140,000 ordinary shares of
SDL plc. Proportionally, the Company would be entitled to convert
US$160,000 in principal amount of the ALPNET Note into 112,000 ordinary
shares of SDL plc. SDL plc has also agreed to negotiate, on or after
January 21, 2002, with the Company regarding the conversion of additional
principal amounts.

DNG Capital Corp. is a private company wholly-owned by Mr. DeMare, a
director of the Company. Donald W. Busby is an officer and director of the
Company and was the settlor and retains the power to remove the trustee of
the Donald W. Busby 1999 Irrevocable Trust.

-21-

(b) during the year ended August 31, 2000, the Company provided a US$125,000
relocation loan to Donald W. Busby, the President, Chairman and CEO of the
Company. The loan bears interest at 5% per annum, compounded monthly, and
matures on March 27, 2002. As at December 31, 2001, the US$125,000
principal remained outstanding.

Employees

The Company's management functions are provided by private companies owned by
officers and directors of the Company. See "Item 7. Major Shareholders and
Related Party Transactions - Related Party Transactions." In addition, the
Company employs a number of consultants to perform specific functions, on an as
needed basis.

Organizational Structure

The following chart sets forth the names of the Company and the significant
subsidiaries, their respective jurisdictions of incorporation and the Company's
ownership interests therein as of the date of this report. Unless otherwise
indicated herein, the term "Company" means collectively the Company and its
subsidiaries.

ORGANIZATION CHART

--------------------------------
| TRIMARK OIL & GAS LTD. |
| (Yukon) |
--------------------------------
|
|
--------------------------------
| TRIMARK RESOURCES INC. |
| (Colorado) |
| 100% |
--------------------------------
|
|
--------------------------------
| SAFARI PETROLEUM LLC |
| (Colorado) |
| 100% |
--------------------------------

Subsidiaries

Trimark Resources Inc.

The Company owns all of the outstanding common shares of Trimark Resources Inc.
("Trimark Inc."), a Colorado corporation, which was incorporated on June 4,
1993. As of the date of this report, Trimark Inc. holds the interests in the
East Lost Hills and San Joaquin Joint Venture properties, the Regional
California properties and other miscellaneous properties in the United States.

Safari Petroleum LLC

Trimark Inc. owns all of the interests in Safari Petroleum LLC ("Safari"), a
Colorado limited liability company, which was formed on June 14, 1995. As of the
date of this report, Safari holds interests in minor oil and gas properties in
the United States.

-22-

Principal Properties

Petroleum and Natural Gas Properties

The Company's principal business is the acquisition of leasehold interests in
petroleum and natural gas rights, and the exploration for and development,
production and sale of petroleum and natural gas. All of the Company's
properties are located in the continental United States.

The Company owns interests in petroleum and natural gas properties in the United
States, identified as follows:

Material Properties

East Lost Hills Joint Venture and San Joaquin Joint Venture, California

Location

The East Lost Hills Joint Venture and the San Joaquin Joint Venture are both
situated in the San Joaquin Basin, approximately 45 miles northwest of
Bakersfield, California.

Property Description

The San Joaquin Basin has proved to be one of the most productive hydrocarbon
producing basins in the continental United States. To date, the approximately
14,000 square mile basin contains 20 fields classified as giant, with each
having produced more than 100 MMBOE. The San Joaquin Basin contains six of the
25 largest oil fields in the U.S.A. and produces more than 78% of California's
oil and gas production. Most of the production within the basin is located along
the western and southern end of Kern County.

The San Joaquin Basin has been dominated by major oil companies with large fee
acreage holdings and has generally been under-explored by independent
exploration and production companies. The large fields in the basin were
discovered on surface anticlines and produce predominantly heavy oil from depths
of less than 5,000 feet. As a consequence, basin operators have focused on
engineering technologies related to enhanced production practices, including
steam floods and, most recently, horizontal drilling. Deep basin targets, both
structural and stratigraphic in nature, remain largely untested with modern
seismic technology and the drill bit.

The Lost Hills Field is an anticlinal structure formed by what appears to be a
combination of compressional forces from the west, as well as right-lateral
motion associated with movement of the San Andreas fault system. The Monterey
and Temblor formations are broken by a high angle thrust fault on the west side
of the structure. The East Lost Hills Joint Venture lies in the footwall side of
this thrust fault, directly east of and structurally below the existing Lost
Hills field. To date, the Lost Hills Field has produced over 115 MBO and 120 BCF
of gas from Pleistocene, Pliocene and Miocene-age sands buried at depths of
between 2,000 to 6,000 feet.

The geological objectives at the East Lost Hills Joint Venture are stacked sands
(layers of sand stacked one over the other) within the Temblor Group which are
buried between 16,500 to 19,000 feet. The uppermost sand encountered by drilling
in the Temblor Group is called the Temblor Sand. Other sands which lie below
this interval have various local names, and vary in thickness and lateral
distribution from well to well. The Temblor sands lie beneath the Miocene-age
Monterey shale, which is a proven source rock, as well as an excellent vertical
reservoir seal. Two dimensional ("2-D") seismic data reveals the presence of a
fault-bounded structural high at Temblor level situated southeast of a well
drilled by Shell and Arco (Shell-Arco #1-23-22, T25S, R20, section 22). An
interpretation made by Armstrong suggests that this well did not penetrate the
Temblor sands, but reached total depth while still drilling in steeply dipping
Monterey shales in the hanging wall of the Lost Hills thrust block.

Exploration

East Lost Hills Joint Venture Work Program

The East Lost Hills Joint Venture holds an interest in a significant number of
leases totalling in excess of 32,000 acres. In order to maintain these leases
the East Lost Hills Joint Venture has committed to drill certain lands.

-23-

The initial test well, the Bellevue #1-17, commenced drilling in May 1998, and
was designed to test prospective Miocene sandstone reservoirs in the Temblor
formation at depths to an anticipated 18,500 feet. On November 23, 1998, while
drilling at 17,640 feet, the well blew out and ignited. An expert well control
team was engaged to contain the fire.

A relief well, the Bellevue #1R-ST-3, was commenced on December 18, 1998, in
order to "kill" the flow of water and hydrocarbons flowing out of the Bellevue
#1-17 well. On May 29, 1999, the kill operation was successfully completed.
After the successful kill operation, the Bellevue #1R-ST-3 relief well continued
with drilling towards a bottom hole location approximately 800 feet away from
the bottom hole location of the Bellevue #1-17 well. On August 24, 1999, the
operator announced that the well would be completed, having reached a total
depth of 17,428 feet, approximately 180 feet into the Temblor formation. Between
October 1, 1999, and October 22, 1999, the Bellevue #1R-ST-3 well was prepared
for a completion test. On October 23, 1999, the completion test was implemented
by perforating the casing and establishing communication with the pay zones so
that gas could flow from the pay zones into the casing. Initial results were
positive and the well flowed gas, albeit at restricted rates. The gas flowed,
but only for a short period of time as the flow was cut off when the
perforations were plugged off. In an attempt to re-establish communication,
larger perforations were made but this too was unsuccessful and the well bore
was plugged with formation sand, shale, and perforating debris. The well bore
was cleaned up and in December 1999 was production tested and flowed gas at
rates ranging between 1.3 and 5.0 MMCF/D. Condensate and water was obtained
during the test. Pressure build-up analysis indicated that only the uppermost
sand unit encountered in the Bellevue #1R-ST-3 well was contributing to the
flow. The operator had considered either a re-drill or re-entry of this well
bore. Management believes minimal maintenance costs will be incurred until the
decision to re-drill or re-enter the well bore is made.

On August 26, 1999, drilling began on the ELH #1 well, approximately two miles
northwest of the #1R-ST-3 well. On April 12, 2000, this well had drilled to a
total depth of 19,724 feet. Production testing began on May 28, 2000 and, based
on the results of the production testing and other analysis, a natural gas
discovery was determined at the East Lost Hills field. After completion of
production facilities and a connection pipeline, this well commenced first
production on February 6, 2001.

Since shortly after commencing production on February 6, 2001, the production
from the ELH #1 well has been constrained by a variety of factors. Most
recently, the major constraint inhibiting production has been the lack of
adequate capacity for disposal of the produced water. Production water has been
and continues to flow through a disposal pipeline connected to disposal
facilities owned by Chevron Texaco. Chevron Texaco limits the amount of water
accepted at its disposal facility. During the fourth fiscal quarter, the ELH #1
well produced a total of approximately 365 MMCFE, averaging approximately four
MMCFE per day. Water production during this period averaged approximately 6,350
BWPD.

During the first months of production, the ELH #1 well was shut-in for varying
time periods ranging from a few hours to multiple days due to operational
difficulties at the Chevron Texaco processing plant, shut-in pressure testing at
the well, rolling brown-outs that were affecting California at the time and for
general maintenance/testing reasons. During this period of random shut-ins,
produced water would typically load in the well and when the ELH #1 well was put
back on line, the water to gas ratio would generally increase. Over a period of
months, the water to gas ratio reached the point where Chevron Texaco is
requiring a decrease in the overall flow accepted at the processing and disposal
facilities. The water to gas ratio increase became most apparent late in the
Company's fourth fiscal quarter and has continued. It is unknown whether this
ratio increase is an independent function of the reservoir or if the decline in
the performance of the well is attributable solely to water loading from
curtailment in overall flow rates. The participants are currently in the process
of preparing to a drill a water disposal well and to build associated pipeline
and disposal facilities in order to remove the water disposal constraint that
has affected the ELH #1 well. It is unknown whether removing the water disposal
constraint will result in a decrease in the water to gas ratio.

The ELH #2 well, located approximately 1.5 miles northwest of the ELH #1 well,
was drilled and cased to a total depth of 18,011 feet. Initial production
testing, in early March 2001, of the upper Temblor interval in the well resulted
in limited wellbore influx of hydrocarbons (approximate flow rate of 3MMCF/D),
higher than expected fluid content, and poorer than expected pressure response.
Many of the initial production test results on the well have been influenced by
mechanical difficulties associated with drill pipe that was inadvertently
cemented across the testing interval. The ELH #2 well is currently shut-in
awaiting pipeline connection. No definitive date for completion of this work
program has been provided by the operator.

-24-

The ELH #3R west flank exploration well was drilled to a total measured depth of
21,769 feet to test the Temblor interval in a separate, seismically defined
structure from the productive East Lost Hills structure. Due to steep dips
encountered in the lower portion of the well, it was determined that the
underlying secondary objective, the Point of Rocks formation, could not be
reached in the existing wellbore. The well was plugged back to a 19,370 feet
measured depth for testing of the lower Temblor. Multiple zones in the lower
Temblor section were perforated and tested in the well. Communication was
established with the formation during testing and no hydrocarbons were
recovered. The well has been suspended pending analysis of new seismic data and
additional offset well information.

The ELH #4 well commenced drilling on November 26, 2000 and reached total depth
of 20,800 feet on August 7, 2001. The objective in drilling the ELH #4 well was
to achieve production rates substantially higher than those in the ELH #1 well.
The wire-line logs indicate the reservoir quality of the sand packages in ELH #4
to be very similar to those in ELH #1. In the ELH #1 well, there was an area of
lost circulation that did not occur on ELH #4. It should be noted that when
drilling the ELH #1 substantially higher mud weights were used and this could
account for some or all of the problems of lost circulation at ELH #1. In
drilling the ELH #4 the well was cored in two different intervals with both 4"
and 3" diameter core. Substantial time and money was spent on obtaining these
core samples and detailed analysis of these samples has only recently been
completed. In addition work is also ongoing in analyzing the results of the 3-D
seismic shoot, which covers the entire East Lost Hills area. A decision was made
to temporarily suspend the well in order to consider the results of core samples
and seismic data. State and Federal regulations require that when a well is
temporarily suspended all potential production zones must be sealed with cement
plugs set above the zones. During the plugging operations on August 26, 2001,
the ELH #4 well started to flow and it became necessary to flare off the gas and
handle the produced condensate during the well control operations.

The side-track of the ELH #4 well to position it over the top of the structure
has commenced. This work program is expected to take approximately 100 days and
should be completed by the end of the first quarter of 2002. As of December 31,
2001, this well was drilling at approximately 19,700 feet.

The ELH #9 well commenced drilling in early August 2001, at a location
approximately 2 miles southeast of the ELH #4 well. This well is projected to
drill to approximately 21,000 feet and is designed to test the continuation of
the East Lost Hills structure in the south easterly direction. The ELH #9 well
was at 17,452 feet on December 31, 2001 and is expected to reach total depth by
the end of the first quarter 2002.

San Joaquin Joint Venture Work Program

With respect to the San Joaquin Joint Venture, the operator commenced drilling
the initial exploratory well on the first of the three initial prospects, Cal
Canal, in June 1999. The Cal Canal well penetrated 1,230 feet of the Temblor
formation with 775 feet of net sand and was drilled to a total depth of 18,100
feet. The well completion commenced on January 20, 2000. Non-commercial
hydrocarbon flow rates were obtained from the initial perforated 10 foot zone.
Several additional zones remain to be tested. The partners in the San Joaquin
Joint Venture have decided to defer further completion or deepening of the
existing well bore until information regarding reservoir quality and performance
is obtained from on-going drilling efforts in the San Joaquin Basin. The San
Joaquin Joint Venture has until February 28, 2002, unless extended, to further
deepen the Cal Canal well, or the leases will terminate.

The participants in this joint venture, on the recommendations of the operator,
have determined that the Lucky Dog Prospect will not be drilled and accordingly,
the joint venture has relinquished its interest in this prospect.

Drilling of the Pyramid Hills Prospect (formerly Pyramid Power) commenced
mid-November 2001 and is expected to reach total depth by the end of June 2002.
The Pyramid Hills 1-9 was at 12,737 feet at December 31, 2001.

Other Properties

Regional California

The Company participated in a regional exploration program in the San Joaquin
Basin of California and to date a number of prospects have been drill tested.
The prospects have much shallower target horizons and the costs to drill are
substantially less than the East Lost Hills prospects. The Company had
approximately a 36% - 44% capital interest before payout (27% - 33% working
interest after payout) in the prospects tested.

-25-

During fiscal 2001 and to date, exploratory test wells have been drilled on the
Mica, Sequoia, Parsley, Merlot and Basil Prospects. No hydrocarbon bearing sands
were encountered on test wells on the Sequoia, Parsley and Merlot Prospects.
These wells were plugged and abandoned. An initial test well on the Mica
Prospect, the Mica 1-17, commenced drilling in late March 2001. On April 24,
2001, the Mica 1-17 was logged at a drill depth of 7,881 feet. It was determined
that the well was outside the channel limits and was suspended for possible
future sidetracking. Although the operator proposed a new location to drill the
Mica 2-17 well, it was unable to extend the lease under acceptable terms. The
Company does not intend to pursue any further exploration of these prospects and
the operator has quitclaimed the leases and relinquished them to the vendor.
California Exploration Ltd., the operator of the Regional California Prospects,
has proposed to drill an additional well at the Basil Prospect.

The Basil Prospect is located in the southern portion of the Sacramento Basin.
This prospect is believed to be a structural fault trap documented with seismic
and well data. This well must be drilled directional under a body of water from
a land based position. The targets are believed to be at 4,500 feet but the well
must be drilled 6,000 feet laterally to the target. The initial test well on the
Basil Prospect commenced drilling on July 25, 2001 and was completed on August
28, 2001 at a depth of 7,829 feet. The Basil Prospect is adjacent to the Suisun
producing field and separated by a fault. The Suisun #25 well was directionally
drilled to a measured depth of 7,829 feet to test the Suisun and Domengine Sands
for natural gas. At 5,550 feet the well encountered the trapping fault with a
440 unit gas spike supporting the sealing ability of the fault. The Suisun Sands
were encountered at 6,545 feet - 132 feet high to prognosis. The first sands
coming in high supports throw on the fault to be greater than expected. Once the
sands were encountered the background gas increased by nearly 200 units (1 unit
= 50 ppm Methane). Throughout the Suisun Sands the background gas remained
between 100 and 200 units with several connection gas readings in excess of 300
units. The Domengine Sands were encountered at a measured depth of 7,120 feet -
162 feet high to prognosis. In the lower Domengine Sands, background gas
readings remained in excess of 500 units. When pulling out of the hole the drill
pipe became stuck at approximately 2,300 feet and after three days of recovery
efforts the pipe, below 3,216 feet remained stuck. It was therefore determined
to temporarily suspend the well.

All indications on the mud log imply a discovery and it is intended to sidetrack
this well from the same surface location using the existing casing down to 2,186
feet. The side-track will parallel the original hole to the same total depth of
7,829 feet. Due to environmental regulations the side-track cannot commence
until a new permit has been obtained. A definitive drill date has not been
determined but the operator expects that it will be between July 2002 and
September 2002. The estimated cost of the replacement well is US$700,000, with
the Company's share at US$222,000.

Others

In September 2000, the Company participated in the drilling of the Gus Landry
well on the West Simon Prospect, situated in Jefferson Davis Parish, Louisiana.
The well commenced production on September 25, 2000 and was shut-in on May 8,
2001 due to the increase in water production. The Gus Landry well has now been
plugged and abandoned and the leases dropped. The Gus Landry well had produced
approximately 102,400 MCF gas. The Company held a 24% working interest (15.9%
net revenue interest).

The Company also holds relatively minor interests in other oil and gas
leaseholds, known as the East Blossom Project (San Joaquin County, California),
and South Haskell Field (Haskell County, Texas).

Oil and Gas Reserves

The following tables set forth information regarding the Company's share of
estimated proven oil and gas reserve quantities, reserve value and discounted
future net revenues. The reserve related information for the year ended August
31, 2001 was determined through independent engineering evaluations completed by
Petrotech Engineering Ltd. ("Petrotech"), an independent petroleum consulting
firm. The reserve related information for the years ended August 31, 2000 and
1999 was determined through independent engineering evaluations completed by Lee
Keeling and Associates, Inc. ("Lee Keeling"), a firm of independent petroleum
consultants. The Company does not have any long-term supply or similar
agreements with foreign governments or authorities in which the Company acts as
producer.

There are numerous uncertainties inherent in estimating quantities of proved
reserves and projecting future rates of production and timing of development
expenditures. The following reserve information represents estimates only and
should not be construed as being exact:

-26-

Present Value of
Estimated Future
Estimated Net Revenues
Gas Future Net Before Income Taxes
Gas Oil Equivalent Revenues (2) Discounted at 10%
Period (MMCF) (MBO) (MMCFE)(1) (US$000) (US$000)

Year Ended August 31, 2001

Proved developed reserves 533.5 27.9 700.9 1,638.4 793.0
Proved undeveloped reserves - - - - -
------- ----- ------- ------- -------
533.5 27.9 700.9 1,638.4 793.0
======= ===== ======= ======= =======
Year Ended August 31, 2000

Proved developed reserves 77.6 10.5 140.6 228.4 221.3
Proved undeveloped reserves 1,104.6 8.0 1,152.6 4,533.2 1,922.1
------- ----- ------- ------- -------
1,182.2 18.5 1,293.2 4,821.6 2,143.4
======= ===== ======= ======= =======

Year Ended August 31, 1999

Proved developed reserves 345.6 24.1 490.2 413.2 273.0
Proved undeveloped reserves - - - - -
------- ----- ------- ------- -------
Total proved reserves 345.6 24.1 490.2 413.2 273.0
======= ===== ======= ======= =======

(1) Oil production is converted to MCFE at the rate of six MCF of natural gas
per barrel of oil. Liquids are converted to MCFE at the rate of seven
gallons of liquids per MCF of natural gas. These conversions are based upon
the approximate energy content of natural gas, liquids and oil.

(2) Estimated future net revenue represents estimated future gross revenue to
be generated from the production of proved reserves, net of estimated
production and future development costs, using oil and gas prices received
and costs in effect as of the date of the estimates. The amounts shown do
not give effect to non-property related expenses, such as general and
administrative expenses, debt service and future income tax expense or
depreciation, depletion and amortization.

Acreage

The following table sets forth as of December 31, 2001, the gross and net acres
of developed and undeveloped oil and gas acreage that the Company holds.
Additionally, the data set forth below are based on the Company's before payout
working interests. In certain cases, the Company has a greater after payout
working interest. In certain other cases, the Company has only an after payout
working interest. As such, the amount of gross and net, developed and
undeveloped acreage will increase when and if certain wells pay out.

Developed Undeveloped
--------------------- ----------------------
Gross Net Gross Net
State Acres Acres Acres Acres
- ----- ------- ------- ------- ------

California 1,920.0 19.2 53,827.2 1,054.6
======= ==== ======== =======

Productive Oil and Gas Wells

The following table sets forth certain information regarding the Company's
ownership as of December 31, 2001 of productive oil and gas wells, operated and
non-operated, in the areas indicated. Additionally, the data set forth below are
based on the Company's before payout working interest. In some cases the Company
has a greater working interest after payout. In certain other cases the Company
has only an after payout working interest. As such, the number of gross and net
wells will increase when and if certain wells pay out.

Gross Net
State Wells Wells
- ----- ----- -----

California 1 0.01
==== ====

-27-

Volumes, Prices and Production Costs

The following table sets forth certain information regarding the production
volumes, average prices received and average production costs associated with
the Company's sale of oil and gas for the periods.

Year Ended August 31,
-------------------------------------
2001 2000 1999

Net production:
Oil (Barrels) 2,851 3,069 3,424
Gas (MCF) 48,379 24,399 28,364

Average sales price:
Oil (per Barrel) $42.90 $36.98 $19.97
Gas (per MCF) $9.16 $3.66 $2.38

Average production cost (MCF) $2.88 $3.61 $2.70

Principal Offices

The Company's corporate office is located at Suite #1305, 1090 West Georgia
Street, Vancouver, British Columbia, Canada. The corporate office facility is
provided on a month-to-month basis by Chase as part of its agreement with the
Company. See "Item 7. Major Shareholders and Related Party Transactions -
Related Party Transactions."

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
- --------------------------------------------------------------------------------

The following discussion of the results of operations of the Company for the
fiscal years ended August 31, 2001, 2000, and 1999 should be read in conjunction
with the consolidated financial statements of the Company and related notes
included therein.

The Company's consolidated financial statements are prepared in accordance with
Canadian GAAP, the application of which, in the case of the Company, conforms in
all material respects for the periods presented with U.S. GAAP except for the
differences referred to in Note 11 of the consolidated financial statements of
the Company included herein. The noon rate of exchange on December 31, 2001,
reported by the United States Federal Reserve Bank of New York, for the
conversion of Canadian dollars into United States dollars was CDN$0.6279
(US$1.5925 = CDN$1.00). The effects of inflation and price changes have not had
a material impact on the Company's income or net sales revenues during the past
three years.

The Company's consolidated financial statements were prepared on a going concern
basis which assumes that the Company will be able to realize assets and
discharge liabilities in the normal course of business.

Overview

The Company, through its subsidiaries, Trimark Inc. and Safari, is engaged in
the business of exploring for and development of oil and gas prospects in the
United States. Substantially all of the Company's oil and gas exploration
activities are conducted jointly with others. Because the Company owns an
undivided interest in each asset and is proportionately liable for its share of
each liability, the consolidated financial information reflects the Company's
proportionate interest in such activities. The Company sells all of its oil and
gas production on a spot basis and does not utilize forward sales contracts.

Under the full cost method, all costs related to the exploration for and
development of petroleum and natural gas reserves are capitalized on a
country-by-country basis. Costs include lease acquisition costs, geological and
geophysical expenses, overhead directly related to exploration and development
activities and costs of drilling both productive and non-productive wells.
Proceeds from the sale of properties are applied against capitalized costs,
without any gain or loss being recognized, unless such a sale would
significantly alter the rate of depletion and depreciation.

-28-

Depletion of exploration and development costs and depreciation of production
equipment is provided using the unit-of- production method based upon estimated
proven petroleum and natural gas reserves. The costs of significant unevaluated
properties are excluded from costs subject to depletion. For depletion and
depreciation purposes, relative volumes of petroleum and natural gas production
and reserves are converted at the energy equivalent conversion rate of six
thousand cubic feet of natural gas to one barrel of crude oil.

In applying the full cost method, the Company performs a ceiling test whereby
the carrying value of petroleum and natural gas properties and production
equipment, net of recorded future income taxes and the accumulated provision for
site restoration and abandonment costs, is compared annually to an estimate of
future net cash flow from the production of proven reserves. Net cash flow is
estimated using year end prices, less estimated future general and
administrative expenses, financing costs and income taxes. Should this
comparison indicate an excess carrying value, the excess is charged against
earnings.

Results of Operations

Year Ended August 31, 2001 Compared to Year Ended August 31, 2000

During the year ended August 31, 2001, the Company recorded a loss of $5,048,280
($0.29 per share), an increase in loss of $4,751,431 from the loss of $296,849
($0.02 per share) incurred in 2000. The increase in loss for 2001 was due to a
writedown of $4,790,379 relating to the Company's petroleum and natural gas
interests.

Revenue from oil and gas sales increased by 157% during 2001, from $202,714 in
2000 to $521,322 in 2001. The increase in 2001 was due to a combination of high
commodity prices received during the first half of fiscal 2001 and increased
production. Production commenced from the ELH #1 on February 6, 2001, and
currently represents the only significant producing property interest to the
Company.

Revenue from oil sales increased 3% from $113,481 in 2000 to $116,910 in 2001.
Oil production decreased 7% from 3,069 BBLS in 2000 to 2,851 BBLS in 2001 and
average selling prices received increased 16%, from $36.98 /BBL in 2000 to
$42.90/BBL in 2001, offsetting the decrease in production. Revenue from natural
gas sales increased 353%, from $89,233 in 2000 to $404,412 in 2001. Natural gas
production increased 98%, from 24,399 mcf in 2000 to 48,379 MCF in 2001. In
addition, the average selling price of natural gas during 2001 received by the
Company increased 150%, from $3.66/MCF in 2000 to $9.16/MCF in 2001. The
increase in the average natural gas price was due to the demand for energy,
particularly in California, from late 2000 to early 2001. The Company sells its
oil and gas on a spot basis.

The Company's production expenses increased 20% to $185,037 in 2001 from
$154,529 in 2000 due to increased production. On a per unit basis, production
expenses decreased to $2.88/MCF in 2001 from $3.61/MCF in 2000.

During 2001, the Company recorded depreciation and depletion charges of
$378,039, compared to $78,340 in 2000. The depreciation and depletion rate
increased from $1.83/MCFE in 2000 to $5.88/MCFE in 2001, and reflects the
unsuccessful exploration results in Regional California and other prospects
during 2001. In addition, the Company recorded a non-cash impairment charge of
$4,790,379 in 2001 as a result of the ceiling test performed effective August
31, 2001. The ceiling test is a cost recovery test and is not intended to result
in an estimate of fair market value.

General and administrative costs decreased by $132,184, from $462,429 in 2000 to
$330,245 in 2001. Of the decrease, $113,332 is attributed to the effect of
unrealized foreign exchange rate fluctuations on U.S. dollar denominated
balances. The Company recorded a $56,600 foreign exchange loss in 2000, compared
to foreign exchange gain of $56,732 in 2001. Audit and legal fees decreased by
$16,832, from $76,082 in 2000 to $59,250 in 2001.

During 2001, the Company expended $4,415,135 in expenditures on its petroleum
interests, which was primarily comprised of the funding of: i) $852,502 towards
the East Lost Hills and San Joaquin Projects, mainly in the funding of
completion of the ELH #1 well, the drilling of the ELH #2, #3, #4 and #9 wells
and the completion of the gas facility; ii) $3,516,024 for the acquisition,
exploration and drilling costs of the Regional California Prospects; and iii)
$46,609 on other minor prospects.

-29-

Year Ended August 31, 2000 Compared to Year Ended August 31, 1999

During the year ended August 31, 2000, the Company reported a net loss of
$296,849 ($0.02 per share), a decrease of $1,745,342, from the loss of
$2,042,191 ($0.40 per share) reported in 1999.

Revenue from oil and gas sales increased 49% during 2000, from $135,865 in 1999
to $202,714 in 2000. Revenue from oil sales increased 66% due to the increased
average selling price for oil during 2000. Oil production fell 10%, from 3,424
BBLS in 1999 to 3,069 BBLS in 2000, and average selling prices increased by 85%,
from $19.97/BBL in 1999 to $36.98/BBL in 2000. Revenue from natural gas sales
increased by 32%, from $67,476 in 1999 to $89,232 in 2000. Natural gas
production decreased by 14%, from 28,364 MCF in 1999 to 24,399 MCF in 2000. The
average selling price of natural gas increased by 54%, from $2.38/MCF in 1999 to
$3.66/MCF in 2000.

The Company's production expenses increased 18%, from $132,176 in 1999 to
$154,529 in 2000. On a per unit basis, production expenses were $2.70/MCF in
1999 compared to $3.61/MCF in 2000.

No impairment provisions were required in 2000 as a result of the ceiling test
performed effective August 31, 2000. During 1999, the Company wrote-down the
carrying value of its petroleum interests by $1,649,518. Excluding the ceiling
test write-down made in 1999, depreciation and depletion expenses increased to
$78,340 in 2000 from $53,982 in 1999. On a per unit basis, the rate was
$1.83/MCF in 2000 compared to $1.10/MCF in 1999.

Interest and other income increased substantially in 2000 to $195,735, compared
to $7,464 in 1999. The significant increase in interest income in 2000 arose due
to the impact of the high levels of cash and term deposits held during 2000 as a
result of the financings conducted by the Company at the end of fiscal 1999 and
early fiscal 2000.

Liquidity and Capital Resources

With the ongoing developments at East Lost Hills, the Company determined to
focus its personnel and financial resources towards the development of its
interests in the San Joaquin Basin and regional area of California.

As of the date of this report, production from the ELH #1 well represents
substantially all of the Company's petroleum and natural gas sales. As
additional wells are drilled at the East Lost Hills and San Joaquin joint
ventures and, if successful, brought on production, the Company anticipates that
revenues will increase. It is not anticipated that operations will be self
sustaining in the next 12 months. Future development of the Company's business
will require additional, and substantial, capital expenditures. Depending upon
the continuing results at East Lost Hills and the deep Temblor exploration
program and at the Regional California programs, the Company will need to raise
additional funds to cover capital expenditures. The disappointing pace of
development at the San Joaquin Basin, the current low petroleum and natural gas
prices and current economic climate has resulted in very low stock prices for
the Company, making it very difficult to raise additional funding without
substantial dilution. There is no assurance that the Company will be able to
raise sufficient funding from cash flow, equity or debt financing, or from sales
of interests in its properties to meet its upcoming capital requirements.

During the year ended August 31, 2001, the Company completed private placements
totaling 4,482,570 shares for proceeds of $2,395,560, of which $2,312,500 was
received in 2001 and $83,000 was received in 2000. The Company has used the
funds primarily to fund exploration and development of the East Lost Hills and
San Joaquin Projects and exploration of the Regional California Program. During
July and August 2001, the Company received a total of $553,200 pursuant to a
debenture financing. The Company and the subscribers are currently negotiating a
revision to the terms and features.

At December 31, 2001, the Company had a working capital deficit of approximately
$920,000, of which $553,200 represents advances made pursuant to a proposed
debenture financing. The terms and conditions are being renegotiated. The
Company anticipates that the advances will be classified as non-current
liabilities upon finalization and closing. As at December 31, 2001, the Company
had not entered into any commodity swap arrangements or hedging transactions.
Although the Company has no current plans to do so, it may enter into commodity
swap and/or hedging transactions in the future in conjunction with oil and gas
production. The Company anticipates that it will continue to experience
significant fluctuations in its working capital as it raises the necessary
funding to continue to participate in ongoing drilling programs.

-30-

As of the date of this report, the Company anticipates that it could incur up to
$1.5 million (US$933,000) in exploration and development expenditures for the
2002 calendar year. The $1.5 million budget assumes that all wells currently in
progress will all be drilled and completed. These projections and work schedules
are contingent on many factors, many of which are beyond the Company's control.
Work schedules can and will change based on results in the field. Actual costs
may vary significantly from current estimates.

Research and Development

During fiscal 1999, 2000 and 2001, the Company incurred $4.6 million, $2.8
million and $4.4 million, respectively, on the acquisition, exploration and
development of its petroleum interests. During the period from September 1, 2001
to December 31, 2001, the Company had incurred approximately $210,000 in
acquisition costs, and exploration and development expenditures.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
- --------------------------------------------------------------------------------

Directors and Senior Management

The names, positions held with the Company and principal occupation during the
five years prior to the date of this report of each director and officer of the
Company as of the date of this report, are as follows:

Name Position with the Company Term of Office (for each office held)
- ---- ------------------------- -------------------------------------

DONALD W. BUSBY(1) Chairman From April 1999 - present
Bakersfield, California, U.S.A.
President From September 1999 - present; and
February 1997 - April 1999
Chief Executive Officer From February 1997 - present
Director From December 1988 - present
Promoter From December 1988 - present
NICK DEMARE(1) Director January 1996 - present
Burnaby, British Columbia, Canada
President From January 1996 - February 1997

GEORGE MUSCROFT(1) Director From February 1997 - present
Portland, Ontario,
Canada

RICHARD DARROW Director February 2001 - present
Bakersfield, California,
U.S.A.

HARVEY LIM Corporate Secretary From December 1988 - present
Burnaby, British Columbia, Canada Director From October 1990 - May 1994

(1) Member of the Audit Committee.

Each officer's and director's term of office shall expire at the Company's next
annual general meeting. The Company does not have an executive committee or a
compensation committee. The Company's audit committee is responsible for
reviewing the Company's financial statements before they are approved by the
Company's directors.

There are no family relationships between any directors or executive officers of
the Company. To the best of the Company's knowledge, there are no arrangements
or understandings with major shareholders, customers, suppliers, or others,
pursuant to which any of the Company's officers or directors was selected as an
officer or director of the Company.

-31-

Set forth below are brief descriptions of recent employment and business
experience of the Company's officers and directors.

Donald W. Busby (Age 64), Chairman, Chief Executive Officer, Promoter and
Director

Since June 1988, Mr. Busby has been the president and owner of DWB Management
Ltd. Mr. Busby, through DWB, provides marketing, financial management and
consulting services to various mineral exploration companies, including the
Company. Since August 1990, Mr. Busby has been the owner and president of Boone
Petroleum Inc., a private company owned by Mr. Busby. Mr. Busby currently serves
as an officer and director of other public reporting companies. See "Item 7.
Major Shareholders and Related Party Transactions - Related Party Transactions -
Conflicts of Interest."

Nick DeMare (Age 47), Director

Mr. DeMare holds a Bachelor of Commerce degree from the University of British
Columbia and is a member in good standing of the Institute of Chartered
Accountants of British Columbia. Since May, 1991, Mr. DeMare has been the
President of Chase Management Ltd., a private company which provides a broad
range of administrative, management and financial services to private and public
companies engaged in mineral exploration and development, gold and silver
production, oil and gas exploration and production and venture capital. Mr.
DeMare indirectly owns 100% of Chase. Mr. DeMare currently serves as an officer
and director of other public reporting companies. See "Item 7. Major
Shareholders and Related Party Transactions - Related Party Transactions -
Conflicts of Interest."

George Muscroft (Age 72), Director

Mr. Muscroft holds a Bachelor of Science degree from the University of Toronto
(1953) and has been a professional engineer since 1954. Since 1984, Mr. Muscroft
has been the President of Modnar Enterprises, an independent consulting
engineering firm.

Richard Darrow (Age 81), Director

Mr. Darrow holds a Master of Geology degree from the University of California at
Berkley. Mr. Darrow is a petroleum geologist resident in Bakersfield, California
and has extensive experience in the oil and gas industry. From 1953 through
March 1984, Mr. Darrow was employed with Standard Oil Company of California.
Since his retirement as a senior staff geologist, Mr. Darrow has been a
self-employed consulting geologist. Mr. Darrow has an extensive geological
knowledge of the San Joaquin and Sacramento oil and gas basins of California.

Harvey Lim (Age 43), Corporate Secretary

Mr. Lim holds a Bachelor of Commerce degree from the University of British
Columbia and is a member in good standing of the Institute of Chartered
Accountants of British Columbia. Mr. Lim was employed by Coopers & Lybrand (now
PricewaterhouseCoopers LLC) from 1981 to 1988. From 1988 to 1991, Mr. Lim was
employed as controller with Ingot Management Ltd. Since 1991, Mr. Lim has been
employed by Chase Management Ltd. as controller. Mr. Lim currently serves as an
officer and director of other public reporting companies. See "Item 7. Major
Shareholders and Related Party Transactions - Related Party Transactions -
Conflicts of Interest."

Compensation

During the fiscal year ended August 31, 2001, the directors and officers of the
Company, as a group, had received or charged the Company a total of $157,239 for
services rendered by the directors and officers or companies owned by the
individuals.

The Company is required, under applicable securities legislation in Canada, to
disclose to its shareholders details of compensation paid to its directors and
officers. The following fairly reflects all material information regarding
compensation paid by the Company to its directors and officers, which
information has been disclosed to the Company's shareholders in accordance with
applicable Canadian law.

-32-

"Named Executive Officers" means the Chief Executive Officer ("CEO") of the
Company, regardless of the amount of compensation of that individual, and each
of the Company's four most highly compensated executive officers, other than the
CEO, who were serving as executive officers at the end of the most recent fiscal
year and whose total salary and bonus amounted to $100,000 or more. In addition,
disclosure is also required for any individuals whose total salary and bonus
during the most recent fiscal year was $100,000 whether or not they are an
executive officer at the end of the fiscal year.

The Company currently has one Named Executive Officer, Donald W. Busby (the
"Named Executive Officer"). The following table sets forth the compensation
awarded, paid to or earned by the Named Executive Officer during the financial
years ended August 31, 1999, 2000 and 2001:

Summary Compensation Table

Annual Compensation Long Term Compensation
------------------------------- --------------------------------
Awards Payouts
----------------------- -------
Securities Restricted
Under Shares or All
Other Options/ Restricted Other
Name and Annual SARs Share LTIP Compen-
Principal Salary Bonus Compensation granted Units Payouts sation
Position Year(1) ($) ($) ($) (#)(2) ($) ($) ($)
- -------------------- ------ ------ ----- ------------ ---------- ---------- ------- ---------

Donald W. Busby 2001 Nil Nil Nil 393,000/Nil N/A N/A 105,296(3)
Chairman, President, 2000 Nil Nil Nil Nil/Nil N/A N/A 60,000(3)
CEO and Director 1999 Nil Nil Nil 605,100/Nil N/A N/A 69,987(3)

(1) Financial years ended August 31, 1999, 2000 and 2001.

(2) Figures represent options granted during a particular year; see "Aggregate
Option" table for the aggregate number of options outstanding at year end.

(3) Amounts paid to private companies wholly owned by Mr. Busby.

Long Term Incentive Plan Awards

Long term incentive plan awards ("LTIP") means "any plan providing compensation
intended to serve as an incentive for performance to occur over a period longer
than one financial year whether performance is measured by reference to
financial performance of the Company or an affiliate, or the price of the
Company's shares but does not include option or stock appreciation rights plans
or plans for compensation through restricted shares or units". The Company has
not granted any LTIP's during the financial year ended August 31, 2001.

Stock Appreciation Rights

Stock appreciation rights ("SAR's") means a right, granted by an issuer or any
of its subsidiaries as compensation for services rendered or in connection with
office or employment, to receive a payment of cash or an issue or transfer of
securities based wholly or in part on changes in the trading price of the
Company's shares. No SAR's were granted to or exercised by the Named Executive
Officer or directors during the financial year ended August 31, 2001.

Option Grants in Last Fiscal Year

The following table sets forth information concerning grants of options to the
Named Executive Officer during the past fiscal year ended August 31, 2001:

-33-

% of Total
Options
Granted to Market Value of
Directors, Securities
Securities Under Employees and Exercise or Underlying Options
Options Granted Associates in Base Price on Date of Grant Expiration
Name (#)(1) Fiscal Year(1) ($/Security) ($/Security) Date
- --------------- ---------------- --------------- ------------ ----------------- ----------

Donald W. Busby 393,000 46.24% 0.60(2) 0.59 Jan. 25/04

(1) Percentage of all options granted during the last fiscal year ended August
31, 2001.

(2) On December 31, 2001, the Company repriced, subject to Canadian Venture
Exchange approval, the options to $0.15 per share. The closing price of the
Company's shares on this date on the Canadian Venture Exchange was $0.14.

Aggregated Option Exercises in Last Fiscal Year andFiscal Year-End Option Values

The following table sets forth details of all exercises of stock options during
the financial year ended August 31, 2001 by the Named Executive Officer and the
fiscal year-end value of unexercised options on an aggregated basis:

Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End at Fiscal Year-End
Securities Aggregate (#)(3) ($)(3)(4)
Acquired on Value
Exercise Realized Exercisable/ Exercisable/
Name (#)(1) ($)(2) Unexercisable Unexercisable
- --------------- ----------- --------- -------------------- ---------------------

Donald W. Busby Nil Nil 680,000/Nil 0(5)/Nil

(1) Number of common shares of the Company acquired on the exercise of stock
options.

(2) Calculated using the closing price of common shares of the Company on the
Canadian Venture Exchange.

(3) As freestanding SARs have not been granted, the number of shares relate
solely to stock options.

(4) Value of unexercised in-the-money options calculated using the closing
price of common shares of the Company on the Canadian Venture Exchange on
August 31, 2001 of $0.25 per share, less the exercise price of in-the-money
stock options.

(5) On December 31, 2001, the Company repriced, subject to Canadian Venture
Exchange approval, the options to $0.15 per share. The closing price of the
Company's shares on this date on the Canadian Venture Exchange was $0.14.

Pension Plans

The Company does not provide retirement benefits for directors or executive
officers.

Termination of Employment, Change in Responsibilities and Employment Contracts

The Company has no plans or arrangements in respect of remuneration received or
that may be received by the Named Executive Officer in the Company's most
recently completed financial year or current financial year in respect of
compensating such officers in the event of termination of employment (as a
result of resignation, retirement, change of control, etc.) or a change in
responsibilities following a change of control, where the value of such
compensation exceeds $100,000 per executive officer.

Compensation of Directors

The following table sets forth stock options granted by the Company during the
financial year ended August 31, 2001 to directors who are not Named Executive
Officers of the Company:

-34-

Market Value of
% of Total Securities Underlying
Securities Under Options Exercise or Options on
Options Granted Granted in Base Price Date of Grant Expiration
Name (#)(1) Financial Year(2) ($/Security)(3) ($/Security) Date
- --------------- --------------- ---------------- ------------- --------------------- ----------

Nick DeMare 100,000 11.76% 0.60(4) 0.59 Jan.25/04
George Muscroft 60,000 7.06% 0.60(4) 0.59 Jan.25/04
Richard Darrow 100,000 11.76% 0.60(4) 0.59 Jan.25/04

(1) The options have no special vesting provisions. The market value of the
common shares of the Company on the date of grant is the price at which the
Company's shares closed for trading on the Canadian Venture Exchange on
that day. Freestanding SARs have not been granted.

(2) Percentage of all options granted during the fiscal year.

(3) The exercise price of stock options was set according to the rules of the
Canadian Venture Exchange.

(4) On December 31, 2001, the Company repriced, subject to Canadian Venture
Exchange approval, the options to $0.15 per share. The closing price of the
Company's shares on this date on the Canadian Venture Exchange was $0.14.

The following table sets forth details of all exercises of stock options/SARs
during the financial year ended August 31, 2001 by directors who are not Named
Executive Officers of the Company and the financial year-end value of
unexercised options/SARs:

Value of Unexercised
Unexercised In-the-Money Options/
Options/SARs at Fiscal SARs at Fiscal Year-End
Securities Aggregate Year-End ($)(3)(4)
Acquired on Value (#)(3)
Exercise Realized Exercisable/ Exercisable/
Name (#)(1) ($)(2) Unexercisable Unexercisable
- ---------------- ----------- --------- ---------------------- ----------------------

Nick DeMare Nil Nil 350,000(5)/Nil Nil/Nil
George Muscroft Nil Nil 85,000/Nil Nil/Nil
Richard Darrow Nil Nil 100,000/Nil Nil/Nil

(1) Number of common shares of the Company acquired on the exercise of stock
options.

(2) Calculated using the closing price of common shares of the Company on the
Canadian Venture Exchange on the date of the exercise, less the exercise
price per share.

(3) As freestanding SARs have not been granted, the numbers relate solely to
stock options.

(4) Value of unexercised in-the-money options calculated using the closing
price of common shares of the Company on the Canadian Venture Exchange on
August 31, 2001, less the exercise price of in-the-money stock options.

(5) Includes 250,000 options granted to Chase Management Ltd. ("Chase"), a
private company wholly owned by Mr. DeMare.

During the most recently completed financial year ended August 31, 2001,
directors received compensation for services provided to the Company in their
capacities as directors and/or consultants and/or experts as follows:

Compensation Table

Annual All other
Compensation compensation
Name of Director Year(1) - Directors fees - Consulting fees
- ---------------- ------- ---------------- -----------------

Nick DeMare 2001 $Nil $47,110(2)
George Muscroft 2001 $Nil $Nil
Richard Darrow 2001 $Nil $4,833

(1) Financial year ended August 31, 2001.

(2) Paid to Chase for accounting and professional services rendered by Chase
personnel.

-35-

Employment Agreements

The Company has directly entered into management contracts with companies
controlled by Messrs. Busby and DeMare for accounting, professional and
management services provided to the Company. Specifically, the Company has a
management contract with DWB, a private company owned by Mr. Busby, at a rate of
US$7,000 per month and with Chase, a company indirectly owned by Mr. DeMare, at
a rate of $3,000 per month. In addition, the Company may be charged for
additional services performed by DWB and Chase. See "Item 7. Major Shareholders
and Related Party Transactions - Related Party Transactions."

Board Practices

Audit Committee

The Company's Audit Committee must be comprised of at least three directors, the
majority of whom are not employees, control persons or members of management of
the Company or any of its associates or affiliates. The board of directors of
the Company, after each annual shareholder' meeting must appoint or re-appoint
an audit committee. As of the date of this annual report, the members of the
audit committee were Mr. Busby, Mr. DeMare and Mr. Muscroft.

The Audit Committee must review the annual financial statements of the Company
before they are approved by the board of directors of the Company. The board of
directors of the Company must review, and if considered appropriate, approve the
annual financial statements of the Company before presentation to the
shareholders of the Company.

Termination of Employment or Change of Control

Other than as described in the Summary Compensation Table and above, the Company
has no plans or arrangements in respect of remuneration received or that may be
received by the Named Executive Officer in the Company's most recently completed
financial year or current financial year in view of compensating such officers
in the event of termination of employment (as a result of resignation,
retirement, change of control, etc.) or a change in responsibilities following a
change of control, where the value of such compensation exceeds $100,000 per
executive officer.

Employees

During the years ended August 31, 2001, 2000 and 1999, the Company had no
full-time or part-time employees in the area of management and administration.
Corporate accounting, management and administration are provided, in part, by
Chase, a company owned by Mr. Nick DeMare, a director of the Company. In the
event the Company needs to employ personnel, it will need to recruit qualified
personnel to staff its operations. The Company believes that such personnel
currently are available at reasonable salaries and wages in the geographic areas
in which the Company and its subsidiaries operate. There can be no assurance,
however, that such personnel will be available in the future. Exploration
activities are conducted by consultants, laborers and technicians hired for the
duration of the exploration program.

Share Ownership

The following table sets forth certain information regarding ownership of the
Company's shares by the Company's officers and directors as of December 31,
2001.

-36-

Shares and Rights Beneficially
Title of Class Name and Address of Owner Owned or Controlled (1) Percent of Class (1)
- -------------- --------------------------- ---------------------------- --------------------

Common Stock Donald W. Busby 5,603,740(2)(3) 23.16%
Bakersfield, California

Common Stock Nick DeMare 1,214,584(4)(5) 5.71%
Burnaby, British Columbia

Common Stock George Muscroft 85,000(6) 0.41%
Portland, Ontario

Common Stock Richard Darrow 130,000(7) 0.63%
Bakersfield, California

Common Stock Harvey Lim 31,000 0.15%
Burnaby, British Columbia

(1) Where persons listed on this table have the right to obtain additional
shares of common stock through the exercise of outstanding options or
warrants, these additional shares are deemed to be outstanding for the
purpose of computing the percentage of common stock owned by such persons,
but are not deemed to be outstanding for the purpose of computing the
percentage owned by any other person. Based on 20,488,016 shares of common
stock outstanding as of December 31, 2001.

(2) Includes 1,224,300 shares of common stock held by Boone Petroleum Inc.
("Boone"), a private company wholly-owned by Mr. Busby and 674,000 shares
held by the Donald W. Busby 1999 Irrevocable Trust ("Busby Trust").

(3) Includes warrants held by Boone to acquire an additional 1,758,640 common
shares, warrants held by the Busby Trust to acquire an additional 1,266,800
common shares and options held by Mr. Busby to acquire 680,000 common
shares.

(4) Includes 6,000 common shares held directly by Mr. DeMare, 153,310 shares
held by DNG Capital Corp. ("DNG"), a private company wholly-owned by Mr.
DeMare, and 261,059 shares held by 888 Capital Corp. ("888"). 888 is a
private company 50% owned by Mr. DeMare.

(5) Includes warrants held by DNG to acquire an additional 116,000 common
shares, warrants held by 888 to acquire 328,215 common shares and options
to acquire an additional 350,000 shares.

(6) Consists of options to acquire an additional 85,000 common shares.

(7) Includes options to acquire 100,000 common shares.

(8) Includes options to acquire 30,000 common shares.

Stock Options

Stock options to purchase securities from the Company are granted to directors
and employees of the Company on terms and conditions acceptable to the
regulatory authorities in Canada, notably the CDNX. Stock options must be
approved by the Company's shareholders at an Annual General Meeting. The Company
has no formal written stock option plan.

Under the stock option program, stock options for up to 10% of the number of
issued and outstanding shares of common stock may be granted from time to time,
provided that stock options in favor of any one individual may not exceed 5% of
the issued and outstanding shares of common stock. No stock option granted under
the stock option program is transferable by the optionee other than by will or
the laws of descent and distribution, and each stock option is exercisable
during the lifetime of the optionee only by such optionee.

The exercise price of all stock options granted under the stock option program
must be at least equal to the fair market value of such shares of common stock
on the date of grant, and the maximum term of each stock option may not exceed
five years.

The exercise prices for stock options were determined in accordance with CDNX
(formerly the VSE) guidelines and reflected the average closing price of the
Company's common stock for the ten trading days on the CDNX (formerly the VSE)
immediately preceding the date on which the directors granted and publicly
announced the stock options.

-37-

As of December 31, 2001, the Company had granted an aggregate of 1,437,000
incentive stock options to purchase shares of the Company's common stock to the
following persons:

Nature No. of Exercise
Optionee of Option Options Price/Share Expiry Date
- -------- -- ------ ------- ----------- -----------

Donald W. Busby Director 287,000 $0.15(1) Jul. 23/02
Chase Management Ltd.(2) Employee 150,000 $0.15(1) Jul. 23/02
Earl Helsley(3) Employee 50,000 $0.15(1) Jul. 23/02
Betty L. Moody Employee 25,000 $0.15(1) Jul. 23/02
George Muscroft Director 25,000 $0.15(1) Oct. 1/02
Chase Management Ltd.(2) Employee 100,000 $0.15(1) Oct. 1/02
Donald W. Busby Director 393,000 $0.15(1) Jan. 25/04
George Muscroft Director 60,000 $0.15(1) Jan. 25/04
Nick DeMare Director 100,000 $0.15(1) Jan. 25/04
Dick Darrow Employee 100,000 $0.15(1) Jan. 25/04
Betty L. Moody Employee 15,000 $0.15(1) Jan. 25/04
Harvey Lim Employee 30,000 $0.15(1) Jan. 25/04
Arabella Smith Employee 15,000 $0.15(1) Jan. 25/04
Rosanna Wong Employee 15,000 $0.15(1) Jan. 25/04
Linda Liu Employee 15,000 $0.15(1) Jan. 25/04
Jacqueline Hibbs Employee 7,000 $0.15(1) Jan. 25/04
Kurt Johnson Employee 50,000(4) $0.15 Dec. 31/04
---------
TOTAL 1,437,000
=========

(1) On December 31, 2001, the Company repriced, subject to CDNX approval, all
existing incentive stock options to $0.15 per share.

(2) A private company indirectly wholly-owned by Mr. Nick DeMare.

(3) Earl Helsley is the son-in-law of Donald W. Busby.

(4) Granted on December 31, 2001, subject to CDNX approval.

All of these options are non-transferable and currently terminate on the earlier
of the expiry date or the 30th day following the day on which the director,
officer or employee, as the case may be, ceases to be either a director, officer
or employee of the Company.

As of December 31, 2001, the directors and officers of the Company, as a group
(5 persons), held options to purchase 1,245,000 shares of the Company's common
stock.

Warrants

As of December 31, 2001, there were non-transferable common share purchase
warrants exercisable for the purchase of 4,986,285 common shares, which expire
at various times until August 15, 2003 and may be exercised at various prices
ranging from $0.52 per share to $0.84 per share, as follows:

Common Shares Issuable Exercise
On Exercise of Warrants Price/Share Expiry
----------------------- ----------- ------

1,185,715 $0.84 Apr. 11/02
118,570 $0.84 Jun. 19/02
500,000 $0.52 Jan. 16/03
1,700,000 $0.52 Mar. 6/03
400,000 $0.62 Aug. 15/02
1,082,000 $0.62 Aug. 15/03
---------
4,986,285
=========

-38-

As of December 31, 2001, the directors and officers of the Company, as a group
(5 persons), held warrants to purchase 3,469,655 shares of the Company's common
stock.

Other Instruments

In July 2001, the Company announced its intention to conduct a $1 million
convertible debenture financing. Initially, the debentures were to bear interest
at 10% per annum, with interest for the first year to be prepaid on closing in
common shares of the Company at $0.35 per share. Interest thereafter would be
paid quarterly in cash or shares at the holder's option. The debentures were
proposed to have a three year term and be convertible into shares at $0.35 per
share in year one, at $0.40 per share in year two and at $0.45 per share in year
three.

As at December 31, 2001, the Company has received $553,200 under the proposed
financing. In light of the current market conditions, the Company and the
debenture subscribers are negotiating a revision to the terms and features.

Hilton has advanced $153,200 pursuant to the financing.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
- --------------------------------------------------------------------------------

Principal Holders of Voting Securities

To the best of the Company's knowledge, it is not directly or indirectly owned
or controlled by another corporation or by any foreign government. The following
table sets forth certain information regarding ownership of the Company's shares
by all persons who own greater than five percent (5%) of the Company's
outstanding shares, as of December 31, 2001.

Shares and Rights Beneficially
Title of Class Name and Address of Owner Owned or Controlled (1) Percent of Class (1)
- -------------- ------------------------- ------------------------------ --------------------

Common Stock Donald W. Busby 5,603,740(2)(3) 23.16%
Bakersfield, California

Common Stock Nick DeMare 1,214,584(4)(5) 5.71%
Burnaby, British Columbia

Common Stock Hilton Petroleum Ltd. 3,720,000 15.37%
Vancouver, British Columbia

(2) Includes 1,224,300 shares of common stock held by Boone and 674,000 shares
held by the Busby Trust.

(4) Includes 6,000 common shares held directly by Mr. DeMare, 153,310 shares
held by DNG and 261,059 shares held by 888.

(5) Includes warrants held by DNG to acquire an additional 116,000 common
shares, warrants held by 888 to acquire 328,215 common shares and options
to acquire an additional 350,000 shares.

None of the Company's principal shareholders have different voting rights than
any of the Company's other common shareholders.

Changes in Shareholdings

There have been no significant changes to the above listed persons' ownership
during the past three fiscal years.

-39-

Change of Control

As of the date of this annual report, there are no arrangements known to the
Company which may at a subsequent date result in a change of control of the
Company.

United States Shareholders

As of December 21, 2001, there were approximately 18 registered holders of the
Company's common shares in the United States, with combined holdings of
3,602,509 shares, representing 17.58% of the issued shares of the Company.

Control by Foreign Government or Other Persons

To the best of the Company's knowledge, the Company is not directly or
indirectly owned or controlled by another corporation, any foreign government,
or any other natural or legal person.

Related Party Transactions

Other than as disclosed below, for the year ended August 31, 2001 and the period
from September 1, 2001 to December 31, 2001, the Company has not entered into
any transactions or loans between the Company and any (a) enterprises that
directly or indirectly through one or more intermediaries, control or are
controlled by, or are under common control with, the Company; (b) associates;
(c) individuals owning, directly or indirectly, an interest in the voting power
of the Company that gives them significant influence over the Company, and close
members of any such individuals' family; (d) key management personnel and close
members of such individuals' families; or (e) enterprises in which a substantial
interest in the voting power is owned, directly or indirectly by any person
described in (c) or (d) or over which such a person is able to exercise
significant influence.

1. The Company has retained DWB, a private company wholly-owned by Donald
Busby, the Chairman, President, Chief Executive Officer and a director of
the Company, to provide marketing, consulting and management services. See
"Item 6. Directors, Senior Management and Employees - Compensation." In
consideration therefor, DWB is currently paid a monthly fee of US$7,000 and
out-of-pocket disbursements incurred by DWB on behalf of the Company.
Management believes the arrangement with Boone is fair to the Company and
similar to terms which could be obtained from unrelated third parties.
During the year ended August 31, 2001, and the period from September 1 ,
2001 to December 31, 2001, the Company paid DWB $105,296 and $44,600,
respectively.

2. The Company has retained Chase, a company wholly-owned by Mr. Nick DeMare,
a director of the Company, to provide office premises, administrative,
accounting and management services. In consideration therefor, Chase is
paid a monthly fee of $3,000 and out-of-pocket disbursements incurred by
Chase on behalf of the Company. In addition, Chase may also provide the
Company additional services which are billed at rates which Chase charges
to unrelated third parties. Management believes the arrangement with Chase
is fair to the Company and similar to terms which could be obtained from
unrelated third parties. During the year ended August 31, 2001 and the
period from September 1, 2001 to December 31, 2001, the Company paid Chase
$47,110 and $15,115, respectively.

3. During the year ended August 31, 2001, Hilton assisted Trimark in its
financings, whereby Hilton sold 2,060,000 shares of the Company from its
holdings for net proceeds of $1,125,616 and used the proceeds to purchase,
in private placement offerings conducted by the Company, as described
below, replacement shares of the Company. Hilton received warrants to
purchase an additional 1,890,000 shares of the Company as part of the
private placements.

4. The Company has completed previous private placements of common stock and
convertible debentures, the subscribers of which include i) companies
wholly-owned by current and former directors, officers and principal
shareholders of the Company. The securities issued pursuant to such private
placements were issued in accordance with the pricing policies of the CDNX.
During the year ended August 31, 2001 and the period from September 1, 2001
to December 31, 2001, the Company conducted the following private
placements:

-40-

(a) Common Stock

Participation Purchase Market
Placee by Insiders Price Price(1) Comments
- ------ ------------- ------- -------- --------

Period from September 1, 2001
to December 31, 2001

Nil Nil

Fiscal Year Ended August 31, 2001

2,200,000 units $0.52 $0.58
- - Hilton Petroleum Ltd. 1,700,000
- - Boone Petroleum Inc. 500,000 Owned by Donald W. Busby
----------
2,200,000
==========
2,164,000 units $0.54 $0.62
- - DNG Capital Corp. 116,000 Owned by Nick DeMare
- - 888 Capital Corp. 180,000 50% owned by Nick DeMare
- - Hilton Petroleum Ltd. 380,000
- - Donald W. Busby 674,000
- - Boone Petroleum Inc. 814,000 Owned by Donald W. Busby
---------
2,164,000
=========

118,750 units Nil $0.70 $0.77

(1) Quoted closing price on date of announcement of private placement.

(b) Debentures

Participation Conversion Market
Placee by Insiders Price Price(1) Comments
- ------ ------------- ------- -------- --------

Fiscal Year Ended August 31, 2001

$553,200 10% debenture(2) $0.35 $0.35
- - Hilton Petroleum Ltd. $153,200

(1) Quoted closing price on date of announcement of convertible debenture
financing.

(2) The terms are currently are being renegotiated. See "Item 6.
Directors, Senior Management and Employees - Other Instruments".

See also "Item 6. Directors, Senior Management and Employees - Compensation."

Indebtedness of Directors, Officers, Promoters and Other Management

During the fiscal year ended August 31, 2000, the Company provided a relocation
loan of US$125,000 to Mr. Busby to assist him in relocating to Bakersfield,
California from Conifer, Colorado. The loan bears interest at 5% per annum,
compounded monthly, and is due on March 27, 2002. The US$125,000 loan remained
outstanding at August 31, 2001 and December 31, 2001.

Other than as described above, none of the directors, officers, promoters or
other members of management or their associates or affiliates of the Company was
indebted to the Company during the fiscal year ended August 31, 2001 and the
period from September 1, 2001 to December 31, 2001.

Conflicts of Interest

The table below shows that certain directors of the Company are also directors,
officers or shareholders of other companies which are engaged in the business of
acquiring, developing and exploiting natural resource properties. Such
associations may give rise to conflicts of interest from time-to-time. The
directors of the Company are required by law to act honestly and in good faith
with a view to the best interest of the Company and to disclose any interest
which they may have in any project or opportunity of the Company. However, each
director has a similar obligation to other

-41-

companies for which such director serves as an officer or director. The Company
has no specific internal policy governing conflicts of interest. As of the date
of this report, no conflicts of interest have arisen, except as described below
and above. Where conflicts of interests arose, the directors of the Company
disclosed their interests and abstained from voting on the transaction.

The following table identifies the name of each director of the Company and any
company, which is a reporting issuer in Canada, and for which such director
currently serves as an officer or director:

Principal Reporting Company Capacity Period

Donald W. Busby Aladdin Resources Corp. President and Director January 2001 - present
Hilton Petroleum Ltd. Director September 1995 - present
Chairman April 1999 - present
President September 1995 - March 1999

Nick DeMare Aladdin Resources Corp. Director January 2001 - present
Secretary January 2001 - November 2001
Andean American Mining Corp. Secretary December 1995 - present
Dial Thru International Inc. Director January 1991 - present
GGL Diamond Corp. Director May 1989 - present
Golden Peaks Resources Ltd. Director January 1992 - present
Hilton Petroleum Ltd. Director October 1989 - present
Hydromet Technologies Limited Director September 2000 - present
Kookaburra Resources Ltd. Director June 1988 - present
Peruvian Gold Limited Director February 1993 - present
Planex Ventures Ltd. Director January 2000 - present

George Muscroft Fenway Resources Ltd. Director September 1991 - present
Primo Resources International Inc. Director December 1991 - present

Richard Darrow None -- --

Harvey Lim Aladdin Resources Corp. Director January 2001 - November 2001
Secretary November 2001 - present
Hilton Petroleum Ltd. Secretary June 1997 - present
Peruvian Gold Limited Secretary October 1995 - present
Planex Ventures Ltd. Director January 2000 - present

There are no known existing or potential conflicts of interest among the
Company, promoters, directors, officers, principal holders of securities and
persons providing professional services to the Company which could reasonably be
expected to affect an investor's investment decision except as described in this
section.

The Company does not have any agreements with its officers or directors,
including any officers or directors with a conflict of interest, with respect to
the amount of time they must spend on the Company's business.

ITEM 8. FINANCIAL INFORMATION.
- --------------------------------------------------------------------------------

Description Page
- ----------- ----

Audited Consolidated Financial Statements for the
Years Ended August 31, 2001, 2000 and 1999 F-1

Significant Changes

Not applicable.

-42-

Dividend Policy

The Company has not paid any dividends on its common shares and does not intend
to pay dividends on its common shares in the immediate future. Any decision to
pay dividends on its common shares in the future will be made by the board of
directors on the Company on the basis of earnings, financial requirements and
other such conditions that may exist at that time.

Legal Proceedings

As of the date of this report, there are no legal proceedings.

ITEM 9. THE OFFER AND LISTING.
- --------------------------------------------------------------------------------

Price History

Effective November 29, 1999, the Vancouver Stock Exchange and the Alberta Stock
Exchange merged and began operations as the CDNX. The CDNX classifies listed
companies into two different tiers based on standards, including historical
financial performance, stage of development, and financial resources. Tier I is
the CDNX's premier tier and is reserved for the CDNX's most advanced issuers
with the most significant financial resources. Tier I issuers benefit from
decreased filing requirements and improved service standards. The majority of
companies listed on the CDNX are Tier II companies. The Company is classified as
a Tier II company and trades on the CDNX under the symbol "TMK".

There have been no trading suspensions imposed by the CDNX or any other
regulatory authorities in the past three years.

The following table sets forth the market price ranges and the aggregate volume
of trading of the common shares of the Company on the VSE and, subsequently the
CDNX, for the periods indicated:

Canadian Venture Exchange Stock Trading Activity

Sales Price
---------------------------
Year Ended Volume High Low
- ---------- ---------- ----- ------

August 31, 2001 20,477,177 $1.07 $0.20
August 31, 2000 36,805,840 $2.91 $0.37
August 31, 1999 13,753,883 $1.75 $0.21
August 31, 1998 845,041 $1.70 $0.25
August 31, 1997 1,145,411 $2.70 $0.84

Sales Price
---------------------------
Quarter Ended Volume High Low
- ------------- ---------- ----- ------

November 30, 2001 2,546,122 $0.27 $0.12
August 31, 2001 1,989,727 $0.61 $0.20
May 31, 2001 8,622,670 $1.07 $0.53
February 28, 2001 8,065,203 $0.82 $0.35
November 30, 2000 1,799,577 $0.85 $0.37
August 31, 2000 7,598,854 $1.30 $0.42
May 31, 2000 9,608,639 $1.40 $0.40
February 28, 2000 6,417,641 $1.56 $0.37
November 30, 1999 13,180,706 $2.91 $1.30

-43-

Sales Price
---------------------------
Month Ended Volume High Low
- ------------- ---------- ----- ------

December 31, 2001 377,084 $0.16 $0.13
November 30, 2001 763,233 $0.23 $0.11
October 31, 2001 1,006,389 $0.27 $0.15
September 30, 2001 776,500 $0.26 $0.11
August 30, 2001 772,432 $0.40 $0.21
July 31, 2001 423,276 $0.40 $0.30

On August 7, 2000, the Company's common shares were approved for quotation on
the Over-the-Counter Bulletin Board system operated by the National Association
of Securities Dealers under the symbol "TOGSF".

OTC-BB Trading Activity

Sales Price (US $)
---------------------------
Year Ended Volume High Low
- ------------- ---------- ----- ------

August 31, 2001 3,532,700 $0.61 $0.16
August 31, 2000 69,700 $0.42 $0.34

Sales Price (US $)
---------------------------
Quarter Ended Volume High Low
- ------------- ---------- ----- ------

November 30, 2001 684,000 $0.17 $0.06
August 31, 2001 1,499,600 $0.40 $0.16
May 31, 2001 868,700 $0.61 $0.37
February 28, 2001 930,700 $0.53 $0.23
November 30, 2000 233,700 $0.55 $0.27
August 31, 2000 69,700 $0.42 $0.34

Sales Price (US $)
---------------------------
Month Ended Volume High Low
- ------------- ---------- ----- ------

December 31, 2001 224,700 $0.09 $0.07
November 30, 2001 84,900 $0.10 $0.08
October 31, 2001 334,800 $0.17 $0.06
September 30, 2001 264,300 $0.16 $0.06
August 31, 2001 217,600 $0.27 $0.16
July 31, 2001 1,027,000 $0.27 $0.20

ITEM 10. ADDITIONAL INFORMATION.
- --------------------------------------------------------------------------------

Articles of Continuance and Bylaws

The Company was incorporated under the laws of British Columbia, Canada on June
16, 1983 by registration of its Memorandum and Articles with the B.C. Registrar
of Companies (the "BC Registrar") under the incorporation number 372193. On
December 14, 1993, the Company was continued to the Yukon Territory, Canada by
the registration of its Articles of Continuance with the Yukon Registrar of
Companys under the access number 27053 (the "Yukon Registrar").

-44-

The following is a summary of all material provisions of the Company's Articles
of Continuance and Bylaws and certain provisions of the Yukon Business
Corporations Act (the "Yukon Act"), applicable to the Company:

A. Director's power to vote on a proposal, arrangement or contract in which
the director is materially interested.

A director or officer who is a party to, or who is a director or officer of
or has a material interest in any person who is a party to, a material
contract or proposed material contract must disclose the nature and extent
of his interest in accordance with the Yukon Act. A director who holds such
material interest may not vote on the transaction but will be counted in
the quorum present at the meeting at which such vote is taken. A director
that is a party to a material contract or proposed material contract cannot
vote on any resolution to approve the contract unless the contract is:

1. an arrangement by way of security for money lent to or obligations
undertaken by a director, or by a body corporate in which a director
has an interest, for the benefit of the corporation or an affiliate;

2. a contract relating primarily to a director's remuneration as a
director, officer, employee or agent of the corporation or an
affiliate;

3. a contract for purchasing and maintaining insurance to cover directors
against liability incurred by them as directors as specified under the
Yukon Act;

4. a contract for the indemnification of a director by the corporation as
specified under the Yukon Act; or

5. a contract with an affiliate.

B. Director's power, in the absence of an independent quorum, to vote
compensation to themselves or any members of their body.

The compensation of the directors is governed by the Company's By-laws
which allow for the determination of remuneration to be paid by the Board
of Directors.

C. Borrowing powers exercisable by the directors.

The directors may, on behalf of the Company:

1. borrow money on the credit of the corporation;

2. issue, reissue, sell or pledge debt obligations of the corporation;

3. give a guarantee on behalf of the corporation to secure performance of
an obligation of any person, subject to certain conditions detailed in
section 46 of the Yukon Act; or

4. mortgage, hypothecate, pledge or otherwise create a security interest
in all or any property of the corporation, owned or subsequently
acquired to secure any obligation of the corporation.

D. Retirement and non-retirement of directors under an age limit requirement.

There are no such provisions applicable to the Company under its Articles
of Continuance, By-laws or the Yukon Act.

E. Number of shares required for a director's qualification

A director of the Company is not be required to hold a share in the capital
of the Company as qualification of his office.

-45-

Description of Common Shares

The authorized capital of the Company consists of an unlimited number of common
shares without par value. A complete description is contained in the Company's
Articles of Continuance.

Of the Company's unlimited share capital, a total of 20,488,016 common shares
were issued and outstanding as of December 31, 2001. All of the common shares of
the Company rank equally as to voting rights, participation in a distribution of
the assets of the Company on a liquidation, dissolution or winding-up of the
Company and the entitlement of dividends. The holders of the common shares are
entitled to receive notice of all shareholder meetings and to attend and vote at
such meetings. Each common share carries with it the right to one vote. The
common shares do not have preemptive or conversion rights. In addition, there
are no sinking fund or redemption provisions applicable to the common shares.

The declaration of dividends on the common shares of the Company is within the
discretion of the Company's Board of Directors. The Company has not paid any
dividends on its common shares and has no policy with respect to the payment of
dividends.

The Company's issued and outstanding common shares are not subject to further
capital calls by the Company and there are no provisions in the Company's
Articles of Continuance or Bylaws or the Yukon Act discriminating against any
existing or prospective holder of the Company's common shares as a result of
such shareholder owning a substantial number of shares.

Neither the Articles of Continuance nor the Bylaws of the Company have any
limitations on non-resident or foreign ownership of the Company's common shares.

The Yukon Act provides that the rights and provisions attached to any class of
shares may not be amended unless consented to by a separate resolution passed by
a majority of not less than 2/3 of the votes cast, in person or by proxy, by
holders of shares of that class.

Shareholder Meetings

The Company's first annual general meeting must take place within eighteen
months of the date of its incorporation and thereafter an annual general meeting
will be held not later than fifteen months from its last meeting of
shareholders, at such time and place as may be determined by the directors.

A notice of record date advising of the Company's annual general meeting and the
date for which the determination of shareholders is to be fixed must be issued 7
days in advance of the record date. The notice of meeting, information circular,
financial statements and proxy are to be mailed to the shareholders not less
than 25 days prior to the meeting date. A quorum for the transaction of business
at a general meeting is two shareholders present in person or represented by
proxy representing a minimum of 5% of the issued voting shares in the Company.

Only members who are registered holders of the Company's shares at the close of
business on the record date (a date which is not more than 50 days, nor less
than 35 days prior to the date of the meeting) who either attend the meeting or
who have completed and delivered a form of proxy in the manner and subject to
the provisions described above shall be entitled to vote or to have their shares
voted at the meeting.

On a show of hands, every person who is present and entitled to vote shall have
one vote. Whenever a vote by show of hands shall have been taken upon a
question, unless a ballot thereon is so required or demanded, a declaration by
the Chairman of the meeting that the vote upon the question has been carried or
carried by a particular majority or not carried, an entry to that effect in the
minutes of the meeting shall be conclusive evidence of the fact without proof of
the number or proportion of the votes recorded in favour of or against any
resolution or other proceeding in respect of the said question, and the result
of the vote so taken shall be the decision of the members upon the said
question.

-46-

Material Contract

1. Oil and Gas Prospect Exploration and Development Agreement dated February
26, 2000, between the Company and CalEx (successor to Pohle Oil & Gas Inc.)
whereby the Company agreed to participate in the generation, acquisition
and exploration of oil and gas projects in the San Joaquin Basin of
California, described as Regional California. See "Item 4. Information on
the Company - Other Properties - Regional California."

Exchange Controls

There are no governmental laws, decrees, or regulations in Canada relating to
restrictions on the export or import of capital, or affecting the remittance of
interest, dividends, or other payments to non-resident holders on the Company's
Common Stock. Any remittances of dividends to United States residents are,
however, subject to a 15% withholding tax (10% if the shareholder is a
corporation owning at least 10% of the outstanding Common Stock of the Company)
pursuant to Article X of the reciprocal tax treaty between Canada and the United
States. See "Item 10. Additional Information-Taxation."

Except as provided in the Investment Canada Act (the "Act"), there are no
limitations specific to the rights of non- Canadians to hold or vote the common
stock of the Company under the laws of Canada or in the charter documents of the
Company.

Management of the Company considers that the following general summary fairly
describes those material provisions of the Act pertinent to an investment by an
American investor in the Company.

The Act requires a non-Canadian making an investment which would result in the
acquisition of control of a Canadian business, the gross value of the assets of
which exceeds certain threshold levels or the business activity of which is
related to Canada's cultural heritage or national identity, to either notify, or
file an application for review with, Investment Canada, the federal agency
created by the Investment Canada Act.

The notification procedure involves a brief statement of information about the
investment of a prescribed form which is required to be filed with Investment
Canada by the investor at any time up to 30 days following implementation of the
investment. It is intended that investments requiring only notification will
proceed without government intervention unless the investment is in a specific
type of business activity related to Canada's cultural heritage and national
identity.

If an investment is reviewable under the Act, an application for review in the
form prescribed is normally required to be filed with Investment Canada prior to
the investment taking place and the investment may not be implemented until the
review has been completed and the Minister responsible for Investment Canada is
satisfied that the investment is likely to be of net benefit to Canada. If the
Minister is not satisfied that the investment is likely to be of net benefit to
Canada, the non-Canadian must not implement the investment or, if the investment
has been implemented, may be required to divest himself of control of the
business that is the subject of the investment.

The following investments by non-Canadians are subject to notification under the
Act:

(1) an investment to establish a new Canadian business; and

(2) an investment to acquire control of a Canadian business that is not
reviewable pursuant to the Act.

The following investments by a non-Canadian are subject to review under the Act:

(1) direct acquisitions of control of Canadian businesses with assets of $5
million or more unless the acquisition is being made by an American
investor;

(2) direct acquisitions of control of Canadian businesses with assets of
$152,000,000 or more by an American investor;

-47-

(3) indirect acquisitions of control of Canadian businesses with assets of $5
million or more if such assets represent more than 50% of the total value
of the assets of the entities, the control of which is being acquired,
unless the acquisition is being made by an American investor;

(4) indirect acquisitions of control of Canadian businesses with assets of
$152,000,000 or more by an American investor if such assets represent more
than 50% of the total value of the assets of the entities, the control of
which is being acquired;

(5) indirect acquisitions of control of Canadian businesses with assets of $50
million or more even if such assets represent less than 50% of the total
value of the assets of the entities, the control of which is being
acquired, unless the acquisition is being made by an American investor in
which case there is no review; and

(6) an investment subject to notification that would not otherwise be
reviewable if the Canadian business engages in the activity of publication,
distribution or sale of books, magazines, periodicals, newspapers, audio or
video music recordings, or music in print or machine-readable form.

Generally speaking, an acquisition is direct if it involves the acquisition of
control of the Canadian business or of its Canadian parent or grandparent and an
acquisition is indirect if it involves the acquisition of control of a
non-Canadian parent or grandparent of an entity carrying on the Canadian
business. Control may be acquired through the acquisition of actual or de jure
voting control of a Canadian corporation or through the acquisition of
substantially all of the assets of the Canadian business. No change of voting
control will be deemed to have occurred if less than one-third of the voting
control of a Canadian corporation is acquired by an investor.

An American, as defined in the Act includes an individual who is an American
national or a lawful, permanent resident of the United States, a government or
government agency of the United States, an American-controlled corporation,
limited partnership, trust or joint venture and a corporation, limited
partnership, trust or joint venture that is neither American-controlled or
Canadian-controlled of which two-thirds of its board of directors, general
partners or trustees, as the case may be, are any combination of Canadians and
Americans.

The higher thresholds for Americans do not apply if the Canadian business
engages in activities in certain sectors such as oil, natural gas, uranium,
financial services (except insurance), transportation services or media
activities.

The Act specifically exempts certain transactions from either notification or
review. Included among the category of transactions is the acquisition of voting
shares or other voting interests by any person in the ordinary course of that
person's business as a trader or dealer in securities. Given the nature of the
Company's business and the size of its operations, management does not believe
the Investment Canada Act would apply to an investment in the Company's shares
by a U.S. investor.

Taxation

Material Canadian Federal Income Tax Consequences

Management of the Company considers that the following discussion fairly
describes the material Canadian federal income tax consequences applicable to a
holder of Common Stock of the Company who is a resident of the United States and
who is not a resident of Canada and who does not use or hold, and is not deemed
to use or hold, his shares of Common Stock of the Company in connection with
carrying on a business in Canada (a "non-resident shareholder").

This summary is based upon the current provisions of the Income Tax Act (Canada)
(the "ITA"), the regulations thereunder (the "Regulations"), the current
publicly announced administrative and assessing policies of Revenue Canada,
Taxation and all specific proposals (the "Tax Proposals") to amend the ITA and
Regulations announced by the Minister of Finance (Canada) prior to the date
hereof. This description is not exhaustive of all possible Canadian federal
income tax consequences and, except for the Tax Proposals, does not take into
account or anticipate any changes in law, whether by legislative, governmental
or judicial action.

-48-

Dividends

Dividends paid on the common stock of the Company to a non-resident will be
subject to withholding tax. The Canada-U.S. Income Tax Convention (1980)
provides that the normal 25% withholding tax rate is reduced to 15% on dividends
paid on shares of a corporation resident in Canada (such as the Company) to
residents of the United States, and also provides for a further reduction of
this rate to 5% where the beneficial owner of the dividends is a corporation
which is a resident of the United States which owns at least 10% of the voting
shares of the corporation paying the dividend.

Capital Gains

In general, a non-resident of Canada is not subject to tax under the ITA with
respect to a capital gain realized upon the disposition of a share of a
corporation resident in Canada that is listed on a prescribed stock exchange.
For purposes of the ITA, the Company is listed on a prescribed stock exchange.
Non-residents of Canada who dispose of shares of the Company will be subject to
income tax in Canada with respect to capital gains if:

(a) the non-resident holder;

(b) persons with whom the non-resident holder did not deal at arm's
length; or

owned not less than 25% of the issued shares of any class or series of the
Company at any time during the five-year period preceding the disposition. In
the case of a non-resident holder to whom shares of the Company represent
taxable Canadian property and who is resident in the United States, no Canadian
taxes will be payable on a capital gain realized on such shares by reason of the
Canada-U.S. Income Tax Convention (1980) (the "Treaty") unless the value of such
shares is derived principally from real property situated in Canada. However, in
such a case, certain transitional relief under the Treaty may be available.

Material United States Federal Income Tax Considerations

The following discussion summarizes the material United States federal income
tax consequences, under current law, applicable to a U.S. Holder (as defined
below) of the Company's common stock. This discussion does not address
consequences peculiar to persons subject to special provisions of federal income
tax law, such as tax-exempt organizations, qualified retirement plans, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, nonresident alien individuals or foreign
corporations, and shareholders owning common stock representing 10% of the vote
and value of the Company. In addition, this discussion does not cover any state,
local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code
of 1986, as amended (the "Code"), Treasury Regulations, published Internal
Revenue Service ("IRS") rulings, published administrative positions of the IRS
and court decisions that are currently applicable, any or all of which could be
materially and adversely changed, possibly on a retroactive basis, at any time.
In addition, this discussion does not consider the potential effects, both
adverse and beneficial of recently proposed legislation which, if enacted, could
be applied, possibly on a retroactive basis, at any time. Holders and
prospective holders of the Company's Common Stock should consult their own tax
advisors about the federal, state, local and foreign tax consequences of
purchasing, owning and disposing of shares of Common Stock of the Company.

U.S. Holders

As used herein, a "U.S. Holder" is defined as (i) citizens or residents of the
U.S., or any state thereof, (ii) a corporation or other entity created or
organized under the laws of the U.S., or any political subdivision thereof,
(iii) an estate the income of which is subject to U.S. federal income tax
regardless of source or that is otherwise subject to U.S. federal income tax on
a net income basis in respect of the common stock, or (iv) a trust whose
administration is subject to the primary supervision of a U.S. court and which
has one or more U.S. fiduciaries who have the authority to control all
substantial decisions of the trust, whose ownership of common stock is not
effectively connected with the conduct of a trade or business in the United
States and shareholders who acquired their stock through the exercise of
employee stock options or otherwise as compensation.

-49-

Distributions on Shares of Common Stock

U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to the Company's common stock are required to include in gross
income for United States federal income tax purposes the gross amount of such
distributions to the extent that the Company has current or accumulated earnings
and profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder's United States federal income tax
liability or, alternatively, may be deducted in computing the U.S. Holder's
United States federal taxable income by those who itemize deductions. (See more
detailed discussion at "Foreign Tax Credit" below.) To the extent that
distributions exceed current or accumulated earnings and profits of the Company,
they will be treated first as a return of capital up to the U.S. Holder's
adjusted basis in the common stock and thereafter as gain from the sale or
exchange of such shares. Preferential tax rates for long-term capital gains are
applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a U.S.
Holder which is a corporation. Dividends paid on the Company's common stock will
not generally be eligible for the dividends received deduction provided to
corporations receiving dividends from certain United States corporations.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of the Company's common stock may be entitled, at
the option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and applies to all
foreign taxes paid by (or withheld from) the U.S. Holder during that year.
Subject to certain limitations, Canadian taxes withheld will be eligible for
credit against the U.S. Holder's United States federal income taxes. Under the
Code, the limitation on foreign taxes eligible for credit is calculated
separately with respect to specific classes of income. Dividends paid by the
Company generally will be either "passive" income or "financial services"
income, depending on the particular U.S. Holder's circumstances. Foreign tax
credits allowable with respect to each class of income cannot exceed the U.S.
federal income tax otherwise payable with respect to such class of income. The
consequences of the separate limitations will depend on the nature and sources
of each U.S. Holder's income and the deductions appropriately allocated or
apportioned thereto. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific and holders and
prospective holders of common stock should consult their own tax advisors
regarding their individual circumstances.

Disposition of Shares of Common Stock

A U.S. Holder will recognize gain or loss upon the sale of shares of common
stock equal to the difference, if any, between (i) the amount of cash plus the
fair market value of any property received; and (ii) the shareholder's tax basis
in the common stock. This gain or loss will be capital gain or loss if the
shares are a capital asset in the hands of the U.S. Holder, and such gain or
loss will be long-term capital gain or loss if the U.S. Holder has held the
common stock for more than one year. Gains and losses are netted and combined
according to special rules in arriving at the overall capital gain or loss for a
particular tax year. Deductions for net capital losses are subject to
significant limitations. For U.S. Holders who are individuals, any unused
portion of such net capital loss may be carried over to be used in later tax
years until such net capital loss is thereby exhausted. For U.S. Holders which
are corporations (other than corporations subject to Subchapter S of the Code),
an unused net capital loss may be carried back three years from the loss year
and carried forward five years from the loss year to be offset against capital
gains until such net capital loss is thereby exhausted.

Other Considerations

The Company has not determined whether it meets the definition of a "passive
foreign investment company" (a "PFIC"). It is unlikely that the Company meets
the definition of a "foreign personal holding company" (a "FPHC") or a
"controlled foreign corporation" (a "CFC") under current U.S. law.

If more than 50% of the voting power or value of the Company were owned
(actually or constructively) by U.S. Holders who each owned (actually or
constructively) 10% or more of the voting power of the Company's common shares
("10% Shareholders"), then the Company would become a CFC and each 10%
Shareholder would be required

-50-

to include in its taxable income as a constructive dividend an amount equal to
its share of certain undistributed income of the Company. If (1) more than 50%
of the voting power or value of the Company's common shares were owned (actually
or constructively) by five or fewer individuals who are citizens or residents of
the United States and (2) 60% or more of the Company's income consisted of
certain interest, dividend or other enumerated types of income, then the Company
would be a FPHC. If the Company were a FPHC, then each U.S. Holder (regardless
of the amount of the Company's common shares owned by such U.S. Holder) would be
required to include in its taxable income as a constructive dividend its share
of the Company's undistributed income of specific types.

If 75% or more of the Company's annual gross income has ever consisted of, or
ever consists of, "passive" income or if 50% or more of the average value of the
Company's assets in any year has ever consisted of, or ever consists of, assets
that produce, or are held for the production of, such "passive" income, then the
Company would be or would become a PFIC. The Company has not provided assurances
that it has not been and does not expect to become a PFIC. Please note that the
application of the PFIC provisions of the Code to resource companies is somewhat
unclear.

If the Company were to be a PFIC, then a U.S. Holder would be required to pay an
interest charge together with tax calculated at maximum tax rates on certain
"excess distributions" (defined to include gain on the sale of stock) unless
such U.S. Holder made an election either to (1) include in his or her taxable
income certain undistributed amounts of the Company's income or (2) mark to
market his or her Company common shares at the end of each taxable year as set
forth in Section 1296 of the Code.

Information Reporting and Backup Withholding

U.S. information reporting requirements may apply with respect to the payment of
dividends to U.S. Holders of the Company's shares. Under Treasury regulations
currently in effect, non-corporate holders may be subject to backup withholding
at a 31% rate with respect to dividends when such holder (1) fails to furnish or
certify a correct taxpayer identification number to the payor in the required
manner, (2) is notified by the IRS that it has failed to report payments of
interest or dividends properly or (3) fails, under certain circumstances, to
certify that it has been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments.

Inspection of Documents

Copies of the documents referred to in this annual report may be inspected at
the Company's corporate office at Suite 1305 - 1090 West Georgia Street,
Vancouver, British Columbia V6E 3V7, during normal business hours.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- --------------------------------------------------------------------------------

Not applicable.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
- --------------------------------------------------------------------------------

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
- --------------------------------------------------------------------------------

Not applicable

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS.
- --------------------------------------------------------------------------------

Not applicable.

-51-

ITEM 15. [RESERVED]
- --------------------------------------------------------------------------------

Not applicable.

ITEM 16. [RESERVED]
- --------------------------------------------------------------------------------

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

See pages 55 through 75.

ITEM 18. FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

Not applicable.

-52-

ITEM 19. EXHIBITS.
- --------------------------------------------------------------------------------

Exhibit Number Description Page
- -------------- ----------- ----

1.1 Roll Over Articles of Golden Chance Resources Inc. and amendments N/A
thereto.(1)
1.2 Certificate of Continuance and Articles of Continuance for Trimark Resources N/A
Ltd. and amendments thereto.(1)
1.3 Bylaws of Trimark Resources Ltd.(1) N/A
3.1 Letter of Intent dated February 25, 1999, between Hilton Petroleum, Inc., STB N/A
Energy Inc. and Berkley Petroleum Corp.(1)
3.2 Letter of Intent dated February 26, 1999, between Trimark Resources, Inc., N/A
Hilton Petroleum, Inc. and STB Energy, Inc.(1)
3.3 Letter Agreement dated March 8, 1999, between Trimark Resources, Inc., N/A
Hilton Petroleum, Inc. and STB Energy, Inc.(1)
3.4 Purchase and Sale Agreement dated June 15, 1999, between Hilton Petroleum, N/A
Inc. and Trimark Resources, Inc.(1)
3.5 Letter of Intent dated April 12, 1999, between Trimark Oil & Gas Ltd. and N/A
Philip Zaccaria and amendment dated May 14, 1999. (1)
3.6 Agreement dated April 11, 1997, between E.J. Helsley, Trimark Resources, N/A
Inc. and International Trimark Resources Ltd.(1)
3.7 Agreement dated September 10, 1997, between Trimark Resources, Inc., N/A
Trimark Oil & Gas Ltd. and Rainbow Oil & Gas, Inc.(1)
3.8 Agreement dated September 12, 1997, between Trimark Resources, Inc., N/A
Trimark Oil & Gas Ltd. and STB Energy Inc.(1)
3.9 Agreement dated September 1, 1993, between Trimark Resources Inc. and N/A
DWB Management Ltd.(1)
3.10 Participation Agreement dated October 8, 1997, between Trimark Resources, N/A
Inc. and Texstar Petroleum, Inc. (2)
3.11 Mutual Settlement and Release Agreement dated December 15, 1999 (3) N/A
3.12 Form of Loan Agreement Between Donald W. Busby and Trimark Oil & Gas N/A
Ltd. dated November 19, 1999(4)
3.13 Oil and Gas Prospect Exploration and Development Agreement dated February N/A
26, 2000(4)

(1) Previously filed as an exhibit to the Company's Registration Statement on
Form 20-F, filed with the Commission on July 29, 1999. File number 0-30196.

(2) Previously filed as an exhibit to the Company's Amended Registration
Statement on Form 20-F/A Amendment No. 1, filed with the Commission on
October 29, 1999. File number 0-30196.

(3) Previously filed as an exhibit to the Company's Amended Registration
Statement on Form 20-F/A Amendment No. 3, filed with the Commission on
January 18, 2000. File number 0-30196.

(4) Previously filed as an exhibit to the Company's Annual Report on Form 20-F,
filed with the Commission on February 28, 2001. File number 0-30196.

-53-

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.

TRIMARK OIL & GAS LTD.

Dated: February 1, 2002 /s/ Nick DeMare
--------------------------- ------------------------------------
Nick DeMare, Director

-54-

- --------------------------------------------------------------------------------

TRIMARK OIL & GAS LTD.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED

AUGUST 31, 2001, 2000 AND 1999

(Expressed in Canadian Dollars)

- --------------------------------------------------------------------------------

F-1

-55-

AUDITORS' REPORT

To the Shareholders of
Trimark Oil and Gas Ltd.

We have audited the consolidated balance sheets of Trimark Oil and Gas Ltd. as
at August 31, 2001 and 2000 and the consolidated statements of loss and deficit
and cash flow for the years ended August 31, 2001, 2000 and 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at August 31, 2001
and 2000 and the results of its operations and its cash flow for the years ended
August 31, 2001, 2000 and 1999 in accordance with Canadian generally accepted
accounting principles.

Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected assets and shareholders' equity as at August 31, 2001 and
2000 and results of operations for the year ended August 31, 2001, 2000 and 1999
to the extent summarized in Note 11 to the consolidated financial statements.

Vancouver, B.C. /s/ D&H Group
November 27, 2001, except for Note 13
which is as of December 31, 2001 Chartered Accountants

(D&H Group was formerly known as Dyke & Howard)

D & H Group
A Partnership of Corporations
A Member of BHD Association with affiliated offices
across Canada and Internationally
10th Floor, 1333 West Broadway, Vancouver, BC V6H 4C2
www.dhgroup.ca F 604-731-9923 T 604-731-5881

F-2

-56-

TRIMARK OIL & GAS LTD.
CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31, 2001 AND 2000
(Expressed in Canadian Dollars)

2001 2000
$ $
A S S E T S
CURRENT ASSETS

Cash 214,390 1,306,708
Amounts receivable 48,942 261,634
Inventory 70,050 -
Current portion of other assets (Note 4) 193,463 -
------------ -----------
526,845 1,568,342

PETROLEUM AND NATURAL GAS INTERESTS (Note 3) 7,022,246 7,795,380

OTHER ASSETS (Note 4) 619,080 772,905
------------ -----------
8,168,171 10,136,627
============ ===========

L I A B I L I T I E S

CURRENT LIABILITIES

Accounts payable and accrued liabilities (Note 8(b)) 520,629 306,565
Advances (Note 5) 553,200 -
------------ -----------
1,073,829 306,565
------------ -----------

S H A R E H O L D E R S ' E Q U I T Y

SHARE CAPITAL (Note 6) 19,537,102 17,141,542

SHARE SUBSCRIPTIONS RECEIVED (Note 6(a)) - 83,000

DEFICIT (12,442,760) (7,394,480)
------------ -----------
7,094,342 9,830,062
------------ -----------
8,168,171 10,136,627
============ ===========
OPERATIONS (Note 1)

APPROVED BY THE BOARD

/s/ Donald W. Busby , Director
- -------------------

/s/ Nick DeMare , Director
- -------------------

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

F-3

-57-

TRIMARK OIL & GAS LTD.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

2001 2000 1999
$ $ $

REVENUES

Oil and gas sales 521,322 202,714 135,865
Interest and other 114,098 195,735 7,464
------------ ----------- -----------
635,420 398,449 143,329
------------ ----------- -----------
EXPENSES

Production 185,037 154,529 132,176
General and administrative 330,245 462,429 349,844
Depreciation, depletion and impairment 5,168,418 78,340 1,703,500
------------ ----------- -----------
5,683,700 695,298 2,185,520
------------ ----------- -----------
NET LOSS FOR THE YEAR (5,048,280) (296,849) (2,042,191)

DEFICIT - BEGINNING OF YEAR (7,394,480) (7,097,631) (5,055,440)
------------ ----------- -----------
DEFICIT - END OF YEAR (12,442,760) (7,394,480) (7,097,631)
============ =========== ===========

LOSS PER COMMON SHARE $(0.29) $(0.02) $(0.40)
============ =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 17,361,325 14,770,945 5,057,787
============ =========== ===========

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

F-4

-58-

TRIMARK OIL & GAS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

2001 2000 1999
$ $ $

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Net loss for the year (5,048,280) (296,849) (2,042,191)
Items not involving cash
Depreciation, depletion and impairment 5,168,418 78,340 1,703,500
Unrealized foreign exchange (39,638) - -
----------- ----------- -----------
80,500 (218,509) (338,691)

Decrease (increase) in amounts receivable 212,692 (233,245) 3,337

Increase in inventory (70,050) - -

Increase in accounts payable and accrued liabilities 214,064 42,450 (197,772)
----------- ----------- -----------
437,206 (409,304) (533,126)
----------- ----------- -----------
FINANCING ACTIVITIES

Issuance of common shares 2,312,560 3,933,801 493,990
Issuance of special warrants - - 4,400,200
Issuance costs - (323,770) (276,404)
Share subscriptions received - 83,000 1,116,570
Advances received (repayment of) 553,200 - (65,220)
----------- ----------- -----------
2,865,760 3,693,031 5,669,136
----------- ----------- -----------
INVESTING ACTIVITIES

Petroleum and natural gas interests expenditures (4,415,135) (2,817,323) (4,625,161)
Proceeds from sale of petroleum and natural gas interests 19,851 39,728 1,038,380
Additions to other assets - (772,905) -
----------- ----------- -----------
(4,395,284) (3,550,500) (3,586,781)
----------- ----------- -----------

DECREASE IN CASH FOR THE YEAR (1,092,318) (266,773) 1,549,229

CASH - BEGINNING OF YEAR 1,306,708 1,573,481 24,252
----------- ----------- -----------
CASH - END OF YEAR 214,390 1,306,708 1,573,481
=========== =========== ===========

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

F-5

-59-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

1. OPERATIONS

Trimark Oil & Gas Ltd. (the "Company") is an independent energy company
engaged in the acquisition, exploration and development of crude oil and
natural gas properties in the United States.

As at August 31, 2001, the Company has a working capital deficiency of
$546,984 and for the year ended August 31, 2001, the Company incurred a net
loss of $5,048,280. The future viability of the Company is dependent upon
the continued financial support of the Company's creditors, the ability to
obtain additional financing to satisfy future working capital requirements
and, in the longer term, the generation of profit and positive cash flow
from business operations.

2. ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles ("Canadian GAAP").
The significant differences between these principles and those that would
be accepted under United States generally accepted accounting principles
("US GAAP") are disclosed in Note 11.

The preparation of financial statements in conformity with Canadian 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.

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Trimark Resources Inc. and Safari
Petroleum, LLC. Intercompany balances and transactions are eliminated on
consolidation.

Petroleum and Natural Gas Interests

The Company follows the full cost method of accounting for petroleum and
natural gas operations. Under this method all costs related to the
exploration for and development of petroleum and natural gas reserves are
capitalized on a country-by-country basis. Costs include lease acquisition
costs, geological and geophysical expenses, overhead directly related to
exploration and development activities and costs of drilling both
productive and non-productive wells. Proceeds from the sale of properties
are applied against capitalized costs, without any gain or loss being
recognized, unless such a sale would significantly alter the rate of
depletion and depreciation.

F-6

-60-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

2. ACCOUNTING POLICIES (continued)

Depletion of exploration and development costs and depreciation of
production equipment is provided using the unit-of-production method based
upon estimated proven petroleum and natural gas reserves. The costs of
significant unevaluated properties are excluded from costs subject to
depletion. For depletion and depreciation purposes, relative volumes of
petroleum and natural gas production and reserves are converted into
equivalent units based upon relative energy content. Depreciation of the
gathering facility is charged to earnings over an estimated useful life of
10 years on a straight-line basis.

In applying the full cost method, the Company performs a ceiling test
whereby the carrying value of petroleum and natural gas properties and
production equipment, net of recorded future income taxes and the
accumulated provision for site restoration and abandonment costs, is
compared annually to an estimate of future net cash flow from the
production of proven reserves. Net cash flow is estimated using year end
prices, less estimated future general and administrative expenses,
financing costs and income taxes. Should this comparison indicate an excess
carrying value, the excess is charged against earnings.

Substantially all of the Company's oil and gas exploration, development and
production activities are conducted jointly with others and, accordingly,
these consolidated financial statements reflect the Company's proportionate
interest in such activities.

Revenue Recognition

The Company recognizes petroleum and natural gas revenues from its
interests in producing wells as oil and gas is produced and sold from these
wells. The Company has no gas balancing arrangements in place. Oil and gas
sold is not significantly different from the Company's product entitlement.

Cash Equivalents

Cash includes cash and short-term deposits maturing within 90 days of the
original date of acquisition.

Inventory

Inventory consists of materials inventory. The materials inventory balance
include equipment held for future use and is accounted for based on the
lower of moving average cost method or market.

F-7

-61-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

2. ACCOUNTING POLICIES (continued)

Foreign Currency Translation

Monetary assets and liabilities are translated into Canadian dollars at the
balance sheet date rate of exchange and non-monetary assets and liabilities
at historical rates. Revenues and expenses are translated at appropriate
transaction date rates except for amortization, depreciation and depletion,
which are translated at historical rates. Gains and losses on translation
are included in income.

Income Taxes

Income tax liabilities and assets are recognized for the estimated tax
consequences attributable to differences between the amounts reported in
the consolidated financial statements and their respective tax bases, using
enacted income tax rates. The effect of a change in income tax rates on
future income tax liabilities and assets is recognized in income in the
period that the change occurs.

Share Option Plan

The Company grants share options in accordance with the policies of the
Canadian Venture Exchange (the "CDNX") as described in Note 6(c). No
compensation expense is recognized for this plan when shares or share
options are issued pursuant to the plan. Consideration paid for the shares
on exercise of the share options is credited to share capital.

Earnings (Loss) Per Share

Earnings (loss) per common share amounts have been calculated and presented
in accordance with the new recommendations of the Canadian Institute of
Chartered Accountants.

Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding
during the period. The weighted average number of common shares calculated
excludes contingently returnable common shares. The computation of diluted
earnings per share assumes the conversion, exercise or contingent issuance
of securities only when such conversion, exercise or issuance would have a
dilutive effect on earnings per share. The dilutive effect of outstanding
options and warrants and their equivalents is reflected in diluted earnings
per share by application of the treasury stock method.

The new standard has been applied on a retroactive basis and had no impact
on the amounts previously presented.

F-8

-62-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

3. PETROLEUM AND NATURAL GAS INTERESTS

2001 2000
$ $

Evaluated Properties
Acquisitions and leasehold costs 5,829,076 3,102,658
Exploration and development costs 4,185,331 751,038
Gathering facility 146,242 -
----------- -----------
10,160,649 3,853,696
----------- -----------
Unevaluated Properties
Acquisitions and leasehold costs 2,680,558 6,057,733
Exploration costs 3,044,687 1,579,181
----------- -----------
5,725,245 7,636,914
----------- -----------
15,885,894 11,490,610
Less: accumulated depreciation, depletion and impairment (8,863,648) (3,695,230)
----------- -----------
7,022,246 7,795,380
=========== ===========

Property acquisition costs include costs incurred to purchase, lease, or
otherwise acquire a property. Exploration costs include the costs of
geological and geophysical activity, dry holes and drilling and equipping
exploratory wells. Development costs include costs incurred to gain access
to prepare development well locations for drilling and to drill and equip
development wells.

During the year ended August 31, 2001, the Company wrote down the carrying
value of its petroleum and natural gas interests by $4,790,379 from the
ceiling test performed effective August 31, 2001. No write- down was
required during the year ended August 31, 2000 from the ceiling test
performed effective August 31, 2000. During the year ended August 31, 1999,
the Company wrote down the carrying value of its petroleum and natural gas
interests by $1,649,518 from the ceiling test performed effective August
31, 1999. The ceiling test is a cost-recovery test and is not intended to
result in an estimate of fair market value.

4. OTHER ASSETS

2001 2000
$ $

Convertible note (a) 619,080 588,880
Loan to officer (b) 193,463 184,025
-------- --------
812,543 772,905
Less current portion 193,463 -
-------- --------
619,080 772,905
======== ========

F-9

-63-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

4. OTHER ASSETS (continued)

(a) The Company holds a US$400,000 unsecured convertible note (the "ALPNET
Note") issued by ALPNET, Inc. ("ALPNET"), a public Utah company
trading on the facilities of the National Association of Securities
Dealers. The ALPNET Note has a variable interest rate of US prime plus
2%, payable on a quarterly basis. The principal is repayable in three
equal annual instalments commencing June 2, 2003. The Company has the
right to convert all or any portion of the outstanding principal into
common stock of ALPNET, on the basis of US$2.22 per share. ALPNET has
the right to pay the full amount, or any portion, of the ALPNET Note
prior to its maturity.

In connection with the ALPNET Note, ALPNET granted the Company a
warrant to purchase up to 90,090 common shares of ALPNET, at an
exercise price of US$3.33 per share, on or before June 2, 2002.

(b) During the year ended August 31, 2000, the Company provided a
US$125,000 relocation loan to the President of the Company. The loan
bears interest at 5% per annum, compounded monthly, and matures on
March 27, 2002. During the year ended August 31, 2001, interest income
of $9,968 (2000 - $4,018) was received.

5. ADVANCES

During the year ended August 31, 2001, the Company received $553,200
pursuant to a proposed $1 million convertible debenture financing. The
terms initially proposed was that the debentures bear interest at 10% per
annum with interest for the first year to be prepaid on closing in common
shares of the Company at $0.35 per share. Interest thereafter would be paid
quarterly in cash or shares at the holder's option. The debentures were
proposed to have a three year term and be convertible into shares at $0.35
per share in year one, at $0.40 per share in year two and at $0.45 per
share in year three. In light of the current market conditions the Company
and the subscribers are negotiating a revision to the terms and features.
The Company has recorded $4,904 of interest expense, based on a rate of 10%
per annum. The amount has been included in accounts payable and accrued
liabilities. Hilton Petroleum Ltd. ("Hilton"), a public company which is a
shareholder of the Company and in which certain of its officers and
directors are also officers and directors of the Company, advanced
$153,200.

F-10

-64-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

6. SHARE CAPITAL

Authorized - unlimited common shares without par value

Issued and outstanding - 2001 2000 1999
------------------------- -------------------------- --------------------------
Number $ Number $ Number $

Balance, beginning of year 16,005,446 17,141,542 11,625,360 12,414,941 3,306,710 5,854,294
------------ ------------ ------------ ------------- ------------ -------------
Issued during the year
Private placements 4,482,570 2,395,560 3,699,279 4,399,261 - -
Exercise of options - - 200,000 228,000 620,300 493,990
Exercise of special warrants - - - - 6,538,350 5,385,100
Exercise of warrants - - 325,000 286,000 - -
Exercise of agents warrants - - 155,807 137,110 - -
Acquisition of
petroleum interest - - - - 1,160,000 1,044,000
------------ ------------ ------------ ------------- ------------ -------------
4,482,570 2,395,560 4,380,086 5,050,371 8,318,650 6,923,090
Issuance costs - - - (323,770) - (362,443)
------------ ------------ ------------ ------------- ------------ -------------
4,482,570 2,395,560 4,380,086 4,726,601 8,318,650 6,560,647
------------ ------------ ------------ ------------- ------------ -------------
Balance, end of year 20,488,016 19,537,102 16,005,446 17,141,542 11,625,360 12,414,941
============ ============ ============ ============= ============ =============

(a) During the year ended August 31, 2001, the Company completed the
following private placements:

(i) 118,570 units at $0.70 per unit for proceeds of $83,000. Each
unit is comprised of one common share and one share purchase
warrant entitling the holder to purchase an additional share at
$0.84 per share on or before June 19, 2002. The $83,000 gross
proceeds were received at August 31, 2000 and recorded as share
subscriptions received. As at August 31, 2001, the warrants
remain outstanding; and

(ii) 2,200,000 units, at $0.52 per unit, for proceeds of $1,144,000.
Each unit is comprised of one common share and one share purchase
warrant entitling the holder to purchase an additional share at
$0.52 per share for a period of two years. The purchasers of the
private placement are a private company owned by the President of
the Company and Hilton. At August 31, 2001, the warrants remained
outstanding; and

F-11

-65-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

6. SHARE CAPITAL (continued)

(iii) 2,164,000 units at $0.54 per unit for proceeds of $1,168,560,
with officers, directors and insiders of the Company. Each unit
is comprised of one common share and one share purchase warrant.
Two warrants entitles the holder to purchase an additional share
at an exercise price of $0.62 per share on or before August 15,
2003. The Company also granted warrants to its agents (the
"Agents' Warrants") to purchase 400,000 common shares of the
Company at an exercise price of $0.62 per share on or before
August 15, 2002. At August 31, 2001, the warrants and Agents'
Warrants remained outstanding.

(b) During the year ended August 31, 2000, the Company completed a number
of private placement financings, as follows:

(i) 2,513,564 units, at $1.42 per unit, for proceeds of $3,245,491,
net of finders fees and issue costs of $323,770. Each unit
consisted of one common share and one share purchase warrant. Two
warrants entitled the holder to purchase an additional share for
a period of two years, at a price of $1.56 per share on or before
September 24, 2000 and thereafter, at $1.73 per share on or
before September 24, 2001. Subsequent to August 31, 2001, the
warrants expired without exercise. Directors, officers and a
company controlled by the President of the Company purchased
202,079 units.

(ii) 1,185,715 units at $0.70 per unit, for proceeds of $830,000. Each
unit consisted of one common share and one share purchase
warrant. Each warrant entitles the holder to purchase an
additional share for a period of two years, at a price of $0.84
per share on or before April 11, 2002. The Chairman, private
corporations controlled by the President of the Company and a
director of the Company purchased all of the units. As of August
31, 2001, the warrants remained unexercised.

(c) The Company grants share options in accordance with the policies of
the CDNX. Under the general guidelines of the CDNX the Company may
reserve up to 10% of its issued and outstanding shares to its
employees, directors or consultants to purchase common shares of the
Company.

Stock options to directors and employees of the Company and
consultants to acquire shares were granted and outstanding as at
August 31, 2001. These options are exercisable on varying dates
expiring from fiscal 2002 to fiscal 2004 at prices ranging from $0.60
to $1.90 per share.

F-12

-66-

TRIMARK OIL & GAS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 2001, 2000 AND 1999
(Expressed in Canadian Dollars)

6. SHARE CAPITAL (continued)

Details of options outstanding are as follows:

2001 2000
------------------------------- -------------------------------
2001 Weighted 2000 Weighted
Number Average Number Average
of Options Exercise Price of Options Exercise Price
$ $

Balance, beginning of year 837,000 1.28 902,000 1.13
Granted 850,000 0.61 150,000 1.90
Exercised - - (200,000) 1.14
Cancelled/expired (100,000) 1.33 (15,000) 0.70
--------- ---------
Balance, end of year 1,587,000 0.92 837,000 1.28
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