ITEM 4.  INFORMATION ON THE COMPANY

4.A. History and Development of the Company

Introduction

Camflo International Inc. (hereinafter, together with its subsidiaries, is also referred to as the "Company") in engaged in the exploration for oil/gas.

The Company’s executive office is located at:

 789 West Pender Street, #1205, Vancouver, British Columbia, Canada  V6Z 1H2

 Telephone: 604-685-9181; and

 Facsimile: 604-685-9182.

 Website: http://www.camflo.com/s/Home.asp

The Company’s registered office is located at:

 3081 Third Avenue, Whitehorse, Yukon Territory  Y1A 4Z7

 Telephone: 867-668-4405; and

 Facsimile: 867-668-3710.

The contact person is: Thomas Doyle, President/CEO/Director.

The Company's fiscal year ends December 31st.

The Company's common shares trade on the TSX Venture Exchange in Canada under the symbol "CFF.V”.

The Company has an unlimited number of no-par common shares authorized and an unlimited number of no-par preferred shares authorized.  At 12/31/2003, the end of the Company's most recent fiscal year, there were 6,630,066 common shares issued and outstanding.  At 5/31/2004, there were 13,904,062 common shares issued and outstanding.

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP); nevertheless, the financial statements conform in all material respects with US GAAP, except as disclosed in footnotes to the financial statements.

Herein, all references to "$" and "CDN$" refer to Canadian Dollars and all references to "US$" refer to United States Dollars.  All references to common shares refer to the Company's Common Shares without Par Value unless otherwise indicated.

The information contained in this Annual Report is current as at 5/31/2004 , except where a different date is specified.

Incorporation/Name Changes

Camflo International Inc. (the "Company") was incorporated by registration of its Memorandum and Articles under the laws of the Province of Alberta on 3/21/1997 and was registered as an extra-provincial company under the Province of British Columbia Company Act on 5/28/1997.  On 7/4/2001, the Company was continued as a Yukon incorporated company.  On 11/19/2001, pursuant to a special resolution passed by shareholders at a Special Annual General Meeting held on 9/27/2001, the Company consolidated its capital on a one new for nine old basis and changed its name from Camflo Resources Ltd. to Camflo International Inc.

Stock Consolidations

The Company consolidated its common shares on a 1-for-9 basis effective 11/22/2001.  All references to number of shares and to per share data reflect post-consolidation basis unless otherwise indicated.

1998-1999 Mineral Property Exploration

Effective 7/20/1998, upon approval of the Alberta Stock Exchange, upon completion of its "qualifying transaction", the acquisition of the Montbray Property in November 1997, a base-metal exploration project in Quebec.  The Montbray Property was acquired for cash and securities valued at $205,000.  Through Fiscal 1999, the Company has expended $212,267 on exploration, which was written-off in Fiscal 2000.  During Fiscal 2001, the Company abandoned the property and wrote off its acquisition cost.

Acquisition of eteeoff.com

By an agreement dated 5/6/1999, the Company acquired 100% of the issued share capital of eteeoff.com Inc. , a Canadian company that was attempting to develop a comprehensive golf site on the Internet that was to provide users with a universal tee-off system.  During Fiscal 1999, the Company abandoned the development of the golf site on the Internet, expensed $130705 of website development costs, and wrote-off deferred acquisition costs of $51,418.

Oil/Gas Property Acquisition/Exploration

In February 2002, the Company acquired a 20% working interest and a 16% net interest in the Wimberley No. 5 gas prospect located in Texas; the well commenced production but production rapidly declined to a point that a refrac was proposed to attempt to revive production; the Company received a cash call for the refrac and upon discussions and consultation, the Company decided not to proceed with further investment and the investment was written down in 2003.

In January 2003, the Company acquired a 10% working interest of oil/ghts in the Snipe Lake Prospect, located in central Alberta.  Additional adjoining acreage was purchased in February 2004.  The Company has completed a successful gas well and is awaiting a pipeline connection to commence production.

In March 2003, the Company acquired a 35% net working interest of oil/gas rights in the Alexander Prospect in central Alberta.

In March 2003, the Company acquired a 21.5% working interest in Prairie River Prospect in central Alberta.  In November 2003, the Company completed a successful gas well and produced $51,805 in revenue during 2003; increased production is anticipated in 2004.

In October 2003, the Company acquired a 68% working interest in Rainbow Lake Project in northern Alberta.

In March 2004, the Company acquired a 30% working interest in oil/gas leases in the Goose River Prospect in central Alberta.

Financings

The Company has financed its operations through funds raised in public/private placements of common shares and loans.

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4.B.  BUSINESS OVERVIEW

Business of the Company .  The Company has acquired oil and gas exploration/ development prospects in Alberta, Canada and Texas, USA.  It is the Company’s objective to further finance these prospects to the production stage and expects to receive positive cash flow.  It is also the Company’s objective to raise further finance to acquire additional oil and gas prospects.

Wimberley No. 5 Gas Prospect .  The Company acquired its 20% working interest (16% net revenue interest) in this prospect in February 2002 for cash and common shares valued at $177,566; associated with the acquisition were $16,324 in legal expenses and $8,000 in finder's fees.  Since that time, the Company has expended $14,357 on related capital assets.  The Wimberley #5 well was brought on-stream in late 2002, but developed a production problem related to the lack of suitable pressure in the well bore to maintain suitably economic production rates.  An additional pump was purchased and installed The Wimberley #5 well was brought back on-stream in early 2003 and production is starting to build.   A refrac was proposed to attempt to revive production; the Company received a cash call for the refrac and upon discussions and consultation, the Company decided not to proceed with further investment and the $212,778 capitalized investment was written down in 2003.

Snipe Lake Prospect .  The Company acquired its 10% working interest in late March 2003 in this property by agreeing to fund its share of costs of a test well.  The test well was drilled and economic gas production was achieved based on the initial drill stem testing.  A production decision was made by the operator and a road construction permit was requested.  Once received it is the intention to complete the construction of a road and hook up the well to the nearby pipeline and commence production.  To date the Company has funded $93,550 of the test well and has committed to fund its portion of the road construction and pipeline hook-up which is estimated to be approximately $240,000.

Alexander Prospect .  On 6/18/2003, the Company announced it planned to acquire a 35% net working interest of petroleum and natural gas rights in four sections of land with potential for multiple oil & gas formations in the Alexander Prospect near Edmonton, Central Alberta.  The agreement calls for the Company to pay 70% of the cost of drilling/completion of two re-entry oil wells and two new gas wells for a 70% working interest before payout, subject to a convertible overriding royalty of 15%.  After payout to the Company on these four wells, the convertible overriding royalty will convert to a 35% working interest, leaving the Company retaining a 35% net working interest.  By drilling these wells, the Company earns an option to participate in additional wells on these four sections on a straight-up basis (35% of costs for a 35% working interest) as well as an additional three contiguous sections (Area of Mutual Interest- AMI) also on a straight-up basis (35% of costs for a 35% working interest).  The Company has completed the first phase purchase of a 35% net working interest of completed gas well 3-7 (Belly River Shallow Gas Well) for $42,000.

Prairie River

The Company entered into an agreement to acquire a 21.5% net working interest in a gas well re -completion, known as the 15-16 well, in one section of land in the Prairie River area of Alberta. The agreement calls for the company to pay 35% of the costs, approximately $56,420, of re-completion for a 21.5% working interest of petroleum and natural gas rights. In addition, the Company took an option on three sections of adjoining lands by paying 40% of a subsequent seismic program and drilling an additional well at 100% working interest before payout and 49.5% working interest after payout at the Company's election.

On October 15, the 15-16 well was placed in production at Prairie River. The well came on stream at an initial rate of approximately 800,000 cubic feet of gas per day with the rate declining slightly since commencement of production. The Company has 21.5% net working interest in this well.   Camflo and its partners have shot and reviewed seismic off-setting its 15-16 well. The seismic identified an offset location to this well at 16-17-69-16 W5. The new location has been built and the well is expected to be drilled during the summer as there was not sufficient time prior to breakup. Camflo renegotiated its previous option agreement and has agreed to participate as to a 51.25% working interest before payout reverting to a 31% working interest after payout in the new well and will have earned this interest in the three sections of petroleum & natural gas leases originally optioned. With facilities in place the 16-17 well, if successful, could be placed on production immediately

Goose River

During the quarter, the Company entered into an agreement to acquire a 30% working interest in four sections of petroleum and natural gas leases in the Goose River area of Alberta. The agreement calls for Camflo to pay 30% of the cost of drilling and completing a test well which has been technically defined by seismic data. Camflo will have a 30% working interest before payout, reverting to an 18% working interest after payout in the test well and will earn an 18% net working interest in all four sections of land. This multi-zone test well, at 6-3- 69-17-W5, has been drilled and cased in expectation for production of commercial quantities of oil and gas. In addition, Camflo has the right to participate on the same terms, by way of an option, on eight sections of adjoining lands with similar geological objectives. These twelve sections of land are contiguous to Camflo’s acreage in the Snipe Lake and Prairie River areas in Northern Alberta.  Camflo acquired an additional 8% working interest in the Goose River test well as a result of a partner not participating in this well. All remaining partners picked up their proportionate working interests. The additional interest has a 500% penalty payment associated against the non participating party. Once 500% of the total costs of this operation have been recovered the non-participating party will reacquire the 8% working interest from Camflo.

Rainbow Lake Project - Black Creek, Northern Alberta

The Company has entered into an agreement to acquire a 68% working interest in three sections of land in the Rainbow area of Alberta near Black Creek. The agreement calls for Camflo to pay 68% of the costs of drilling and completion of a well to test the Keg River reef as defined by 3-D seismic. Camflo will have a 68% working interest before payout, reverting to a 34% working interest after payout, in the petroleum and natural gas rights.

In addition, Camflo has the right to participate, by way of an option, on three sections of adjoining lands with a similar anomaly. Camflo and its partners have drilled and cased the well, 3-18-110-09-W6, at Rainbow Lake. The service rig started its test on this multi-zone well, but due to warm weather and earlier than usual breakup, the test was suspended and will resume as soon as  conditions allow. The Muskeg and Jean Marie formations will be tested for potential oil production and the Sulphur Point formation will be tested for the potential of natural gas production. On a successful completion, this well has set up two more drillable locations.

United States vs. Foreign Sales/Assets

During 2003, the Company generated $51,805 in revenue from oil/gas production.  During 2002 and 2001, the Company generated no revenue from operations.  At 12/31/2003 all assets were located in Canada; at 12/31/2002 $201,890 of the Company’s assets were located in the United States, principally the Wimberley No 5 Gas Prospect.

Plan Of Operations

Source of Funds for Fiscal 2004

The Company’s primary source of funds since incorporation has been through the issuance of common stock and loans.  The Company had modest revenue from oil/gas operations during Fiscal 2003 ($51,805) and anticipates significant oil/gas operation revenues in Fiscal 2004.

The Company had working capital deficit of ($539,578) at 12/31/2003.  During 2004-to-date, the Company has completed several private placements, converted debentures into common shares/warrants, and issued shares upon exercise of warrants and stock options, raising $2,470,000.  At 5/31/2004, the Company had 736,933 outstanding stock options with exercise prices ranging from $0.13 to $0.50.  At 5/31/2003, the Company had 8,198,667 outstanding share purchase warrants with exercise prices ranging from $0.10 to $0.60.

The Company has had discussions with third parties about additional equity offering; but the talks as of 5/31/2004 were preliminary.

Use of Funds for Fiscal 2004

During Fiscal 2004, the Company estimates that total general/administrative costs will be approximately $500,000.  During Fiscal 2004, the Company estimates that it will expend $2 million on property acquisition/exploration.

Anticipated Changes to Facilities/Employees

Since the signing of the property acquisition agreements, the Company added no additional personnel to assist in the seismic programs or for administrative/general activities.  There are no plans to add additional personnel to assist with the seismic/drilling programs; rather, the Company is relying on the property operators to provide all technical staff.

4.C. Organization Structure

The Company currently has no subsidiaries.

4.D.  Property, Plant and Equipment

Executive Offices

The Company's executive offices are located in shared , rented premises of approximately 1,000 square feet at 789 West Pender Street, Suite 1205, Vancouver, British Columbia V6C 1H2.  Rent is $1500 per month.  The Company began occupying this facility in April 2003 and considers the facility adequate for current needs.

Figure No. 1

Rainbow Lake – Black Creek Prospect

The property is accessible year round approximately fifteen hours north of Edmonton, Alberta, Canada.  All required approval permits are in place.

Camflo and its partners have drilled and cased a well, 3-18-110-09-W6, at Rainbow Lake.  The Muskeg and Jean Marie formations will be tested for potential oil production and the Sulphur Point formation is expected to produce commercial quantities of natural gas.  On a successful completion, this well has set up two more drillable locations.  Camflo has a 68% WI BPO (before pay out), reverting to a 34% APO (after pay out) on this well.

a)  Acquired 68% W.I. BPO (before payout) and 34% APO (after payout).

    Earned rights in Twp 110 Range 9 W6M: Sections 7,18,19.

b)  Drilled well as defined by 3D seismic this winter.

c)  Multi Zone Flow test to commence March 2004.

d)  Testing the Muskeg and Jean Marie Formations for Oil.

e)  Testing the Sulphur Point Formation For Gas.

f)  Seismic indicates 2 additional drill locations.

g)  Camflo has the right to participate, by way of an option, on 3 sections of

    adjoining lands with a similar anomaly. Twp 110 Rge 10: Sections 12,13,24.

Snipe Lake Prospect

Acquisition Details

Camflo International Inc. (“the Company”) has acquired a 10% working interest of petroleum and natural gas rights in four sections north of Swan Hills, Alberta.  The 10% working interest is based on paying 10% of the costs of drilling, completion and pipeline tie-in of the test well before payout subject to a convertible overriding royalty of 15%.  After payout, the convertible overriding royalty will convert to a 5% working interest.  By drilling this well, the Company earns an option to participate in further exploration in an additional three contiguous sections at the same terms and conditions.

Property Description

The property consists of four sections of land of 640 acres per section, with additional participation in an adjacent 11 sections.  Seismic data has identified a potential undeveloped Swan Hill Reef (Devonian) build up at the South end of the Snipe Lake Swan Hills pool.  Seismic and drilling could confirm potential reef reservoir with significant recoverable oil reserves.  The operator Innova Energy of Calgary, Alberta has recently drilled a test well and is currently evaluating the results.

Accessibility/Climate/Local Resources/Infrastructure/Physiography

Snipe Lake has year round access for development wells and winter access only for exploratory wells. The property is accessible by paved road approximately five hours north of Edmonton, Alberta, Canada and then by secondary unpaved but passable secondary roads.  All required approval permits are in place.

Work Done by Former Owners

The previous owner completed approximately 5 kilometers of 2D seismic data and expects to shoot a comprehensive 3D program during the following 12 months.

Prairie River Prospect

The property is accessible by paved road approximately five hours north of Edmonton, Alberta, Canada and then by secondary unpaved but passable secondary roads.  All required approval permits are in place.

Camflo and its partners have a producing well, 15-16-69-16-W5.  This well is flowing at a stabilized rate of 800 mcf/d.  Seismic indicates an off-set location to this well at 16-17-69-16-W5.  The new location has been built and is expected to be drilled this summer.  This development well is expected to produce at rates in excess of 2 mmcf/d and will be tied in immediately after completion.  Camflo has a 21.5% net interest in the 15-16 well and a 51.25% WI BPO reverting to a 31% WI APO in the 16-17 well. A further location has been identified by seismic.  Camflo participates in four sections of land at Prairie River.

a)  Camflo paid 35% W.I. to re-complete the 15-16, T69 R16 W5M well in the

    Gething formation to earn net 21.5%.

b)  The 15-16 well is flowing at a stabilized rate of 800 MCF per day.

c)  The 15-16 well is on production, Camflo's interest is 21.5%.

d)  Drilling of offset well, 16-17 51.25 WI BPO 31% APO commencing March 2004.

e)  Immediate tie in and production of 16-17 on a successful well

f)  By re-completion of the 15-16 well, Camflo earns three sections of option

    land in Sections 9, 17 and 18 T69 R16 W5M with a seismic program

g)  Using the results of the seismic program, the Company has a rolling option

    to drill on the option lands

h)  The Company will drill a development well at 16-17 with a larger working

    interest.

i)  The Company will earn the 3 sections of option lands by drilling 16-17.

Goose River Prospect

The property is accessible by paved road approximately four hours north of Edmonton, Alberta, Canada and then by secondary unpaved but passable secondary roads.  All required approval permits are in place.

Camflo and its partners drilled and cased a multi-zone test well, 6-3-69-17-W5, which was technically defined by seismic data.  Camflo will have 30% working interest before payout, reverting to an 18% working interest after payout in the test well and will earn an 18% net working interest in all four sections of land.  In addition, Camflo has the right to participate on the same terms, by way of an option, on eight sections of adjoining lands with similar geological objectives.

a)  Acquired 30% W.I. BPO (before payout) and 18% APO (after payout) in Test

    Well, 6-3-69-17-W5.Will earn rights in Twp 69 Range 17 W5M: Sections 3,4,

    and Twp 68 Range 17 W5M: Sections 33, 34.

b)  Drilling of 6-3-69-17-W5 March 17, 2004.

c)  Test well, 6-3, has been technically defined by seismic.

d)  Camflo has the right to participate, by way of an option, on 8 sections of

    adjoining lands with a similar geological objectives. Twp 68 Rge 17:

    Sections 21,22,27,28,35,36 and Twp 69 Rge 17: Sections 1,2.

Alexander Prospect

The property is accessible by paved road approximately one hour north of Edmonton, Alberta, Canada and then by secondary unpaved but passable secondary roads.  All required approval permits are in place.

Camflo and its partners have four sections of land in the Alexander area that includes an existing Belly River gas well.  Camflo has participated for a 35% WI in the 12-7-57-1-W5, and the 6-7-57-1-W5 wells.  These wells were drilled and cased.  Camflo has also committed for a 30% WI 5-8-57-1-W5, a Belly River well. These wells will be put on production in June 2004.

a)  Re-activated 3-7 T57 R1 W5M Wabamum well to utilize for future water

    disposal

b)  Re-entered 12-7 T57 R1 W5M well and confirmed Ostracod formation

c)  Drill 6-7 T57 R1 W5M to establish Ostracod and Wabamum oil production

d)  Drill 5-8 T57 R1 W5M well to establish Belly River gas production and one

    additional Belly River well

e)  Drill 16-4 T57 R1 W5M well to establish Basal Quartz gas production

f)  Drill future wells after tank battery & water disposal facilities in place

    at 3-7 Wabamum well location.