OMB APPROVAL

10KSB 1 f10ksb.htm OMB APPROVAL This Form 10-KSB is the subject of a Form 12b-25

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________

Commission file number 0-28305

FAIRCHILD INTERNATIONAL CORPORATION

(Name of small business issuer in its charter)

Nevada		91-1880015
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite 1220 Park Place 666 Burrard Street Vancouver, British Columbia		V6C 2X8
(Address of principal executive offices)		(Zip Code)

Issuer's telephone number 604.688.7450

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

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

State issuer's revenues for its most recent fiscal year. $96,850

The aggregate value of the voting stock held by non-affiliates of the registrant, computed by reference to the price at which the common equity was sold as of April 13, 2004 was approximately $809,111.64.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

31,033,044 common shares, $0.001 par value outstanding as of April 13, 2004

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

INDEX

		PAGE
PART I
Item 1	Description of Business	4
Item 2	Description of Property	13
Item 3	Legal Proceedings	14
Item 4	Submission Of Matters to a Vote of Security Holders	14
PART II
Item 5	Market for Common Equity And Related Stockholder Matters	14
Item 6	Management's Discussion and Analysis or Plan of Operation	15
Item 7	Financial Statements	19
Item 8	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
Item 8A	Controls and Procedures	41
PART III
Item 9	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act	41
Item 10	Executive Compensation	43
Item 11	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 12	Certain Relationships and Related Transactions	48
Item 13	Exhibits and Reports on Form 8K	49
Item 14	Principal Accountant Fees and Services	51
Signatures		52

PART I

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this annual report, the terms "we", "us", "our", and "Fairchild" mean Fairchild International Corporation, unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

Item 1. Description of Business
Corporate History

Fairchild was incorporated on June 20, 1997 under the laws of the State of Nevada under the name Goanna Resources, Inc. On June 24, 1999 we changed our name to Fairchild International Corporation.

Our Current Business
Tehama County, California

On April 15, 2002, we entered into a Farmout Agreement with Whittier Energy Company (formerly Olympic Resources (Arizona) Ltd.) wherein we have the right to earn from Whittier an assignment of Whittier's interest in oil and gas leasehold interests in certain lands located in Tehama County, California. Pursuant to the Farmout Agreement, upon payment of a fee of $15,000 for each test well, representing payment for a 3.75% interest in the information and data relating to each test well, and 5% of the costs of drilling and completion as set forth in the Farmout Agreement, we could earn and Whittier would assign a 3.75% undivided interest in five test wells. We had the right to earn a reduced 2.025% interest in a further test well upon payment of 2.7% of the drilling and completion costs and payment of a fee of $8,100 for a 2.025% interest in the data and information with respect to such well. During the year ended December 31, 2002, we acquired a 3.75% undivided interest in four test wells, and incurred net expenditures under the Farmout Agreement of $102,107, which figure includes the allocation to Patch Energy Inc. ("Patch") of its 20% working interest in our 3.75% interest. For the year ended December 31, 2003, we have earned a total of $49,520 in revenue from our interest in the four test wells.

Saskatchewan, Canada

On June 25, 2002, we entered into a participation agreement with Patch to participate in a sixty well drilling program. The oil field is located in Saskatchewan, Canada in the area known as the Kerrobert in the Viking Formation near the Alberta-Saskatchewan Border. Under this participation agreement, we had the right to earn a 12.5% interest in certain drilled wells by incurring, subject to financing, 15.625% of the costs associated with a 10 test well drilling program. This interest represents one-half of the interest which was otherwise then held by Patch under a farmout agreement with True Energy Inc., a Toronto Stock Exchange listed company, as operator. We subsequently entered into a new agreement with Patch to reduce our participation.

On December 2, 2002 we entered into a new participation agreement with Patch which replaced the agreement of June 25, 2002. Pursuant to the terms of a farmout and joint operating agreement dated May 1, 2002 between Patch, True Energy Inc. and Arsenal Energy Inc., Patch had the right to earn a 12.5% interest in the Farmout Lands (as defined in the Farmout Agreement) by incurring 15.625% of the costs (the "Initial Costs") associated with the Test Wells (as defined in the Farmout Agreement).

Pursuant to the terms of the participation agreement, Fairchild had the right to earn up to a one-third (1/3) share of the Interest (the "Partial Interest"), being a 4.167% interest in the 10 Test Wells in consideration of incurring an equal portion of the costs to a maximum of 5.208% of the costs associated with the Test Wells. In order for Fairchild to earn a Partial Interest, it was to pay for costs otherwise to be incurred by Patch pursuant to the terms of the Farmout Agreement, equal to the amount of the Partial Interest to be earned by Fairchild (the "Partial Costs") and Fairchild was to pay such Partial Costs as and when requested by Patch in order that Patch might fulfil its obligations under the Farmout Agreement in respect of the Partial Costs provided that, if Fairchild failed to make such payments, its right to earn the Partial Interest would cease and the agreement was to be terminated. We have earned the 4.167% interest and, in connection therewith, incurred $87,938 as our share of the costs associated with the Test Wells as of December 31, 2003. For the year ended December 31, 2003, we earned $42,593 in revenue from our interest in the 10 test wells.

On February 10, 2003, we entered into another participation agreement with Patch in order to earn a partial interest in a further 9 well drill program (the "Second Program"). The Second Program is now complete. We have earned our 1.75% interest, being a one-sixth share of the interest of Patch in the Second Program. For the year ended December 31, 2003 we expended $35,436 representing our 2.5% portion of the costs associated with the Second Program and earned a total of $4,738 in revenue from our interest in the Second Program.

On April 3, 2003, we entered into an amendment agreement (the "Amendment Agreement") to the participation agreement dated February 10, 2003 with Patch. Patch has confirmed with Fairchild that its ability to continue to earn a 12.5% interest in any wells drilled on certain lands located in the Kerrobert Area of Saskatchewan, Canada, under the terms of a Farmout and Joint Operation Agreement with Arsenal Energy and True Energy, as operator, is contingent upon Patch paying 15.625% of the costs associated with such wells. The Amendment Agreement provides that Fairchild was obligated to incur 2.5% of the costs associated with the second 9 well drill program on the Farmout Lands in order to earn a 1.75% interest in such wells, as opposed to incurring 1.75% of the costs as the original participation agreement provided for, reflecting the increased costs to which Patch is subject.

On November 5, 2003, we entered into a participation agreement with Patch in order to earn a 6.75% working interest in future oil wells in the Kerrobert drilling program in consideration of incurring 8.4375% of the costs associated with any such subsequent wells. No further wells have been drilled on the Farmout Lands subsequent to the entering into of this agreement.

Manahuilla Creek, Texas, USA

On November 6, 2003 we entered into a participation agreement with Patch to participate in an oil and gas prospect located in Goliad County, Texas. Patch holds an agreement with PB Energy USA, Inc. ("PB") whereby Patch has a right to acquire a 3.75% participating working interest in a test well and the oil and gas lands leased by PB in Goliad County by paying 5% of the acquisition costs ($15,000), 5% of the costs of the test well and 3.75% of the costs relating to the development of the oil and gas lands. Under our agreement with Patch (the "Sub-Participation Agreement") we have a right to earn one-half of Patch's interest (1.875%) by paying one-half of Patch's costs. As at December 31, 2003, we have paid Patch $7,500 being one-half of the $15,000 previously paid by Patch on account of the acquisition costs and $2,500 against future costs to be incurred.

On February 23, 2004, we entered into an assignment agreement whereby we agreed to assign to Habanero Resources Inc. one-fifth (1/5) of our interest in the Sub-Participation Agreement, being the right to earn a .375% interest in the test well and the program lands in consideration of Habanero assuming an equal share (1/5) of our costs under the Sub-Participation Agreement.

As well, on February 23, 2004, we entered into an assignment agreement whereby we agreed to assign to Micron Enviro Systems Inc. one-fifth (1/5) of our interest in the Sub-Participation Agreement, being the right to earn a .375% interest in the test well and the program lands in consideration of Micron assuming an equal share (1/5) of our costs under the Sub-Participation Agreement.

Naftogaz, Ukraine

On November 7, 2003 we entered into an agreement with Patch whereby Patch agreed to negotiate with us so as to give Fairchild the opportunity to participate in any venture Patch may become involved in as a result of its relationship with NAFTOGAZ, the Ukranian State oil company. To date no such ventures have been finalized.

General

On January 21, 2003, we filed a Form S-8 Registration Statement to register 925,000 shares of our common stock in connection with Stock Option Agreements with George Tsafalas, David Stadnyk, Byron Cox, Winston Cabell and David Jeffery, each dated January 9, 2003. Mr. Tsafalas was issued 325,000 options, Mr. Stadnyk was issued 350,000 options, Mr. Cox was issued 75,000 options, Mr. Cabell was issued 125,000 options and Mr. Jeffery was issued 50,000 options, to purchase common shares in the capital of our company at an exercise price of $0.09 per share until January 9, 2006.

Pursuant to the Management Agreement dated April 1, 2003 with George Tsafalas our company's President, we agreed to pay to Mr. Tsafalas a monthly salary of $4,500 commencing April 1, 2003 and ending March 31, 2006, representing an annual salary of $54,000 for a three year term. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Tsafalas in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 435,764 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him. In January 2004, we issued 102,272 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him for the month of December 2003.

Pursuant to the Management Agreement dated April 1, 2003 with David Stadnyk, we agreed to pay to Mr. Stadnyk a monthly salary of $4,000 commencing April 1, 2003 and ending March 31, 2006, representing an annual salary of $48,000 for a three year term Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Stadnyk in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 722,434 shares of our common stock to Mr. Stadnyk in lieu of salary otherwise payable to him.

Pursuant to the Management Agreement dated April 1, 2003 with Winston Cabell, we agreed to pay to Mr. Cabell a monthly salary of $1,000 commencing April 1, 2003 and ending March 31, 2004, representing an annual salary of $12,000 Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Cabell in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had accrued $9,000 in unpaid management fees to Mr. Cabell.

Pursuant to the Management Agreement dated April 22, 2003 with Byron Cox, our company's Secretary and Treasurer, we agreed to pay to Mr. Cox a monthly salary of $1,000 commencing May 1, 2003 and ending April 30, 2004, representing an annual salary of $12,000. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Cox in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 116,834 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him. In January 2004, we issued 22,727 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him for the month of December 2003.

Effective April 9, 2003, Steele & Co., Chartered Accountants, resigned as the principal accountant to audit our financial statements. Effective May 16, 2003, Morgan & Company, Chartered Accountants, were engaged as our principal accountant.

On April 15, 2003, we filed a Form S-8 Registration Statement to register 2,350,000 shares of our common stock in connection with Stock Option Agreements with George Tsafalas, David Stadnyk, Byron Cox, John Thornton, Winston Cabell and David Clark, each dated March 24, 2003. Mr. Tsafalas was issued 950,000 options, Mr. Stadnyk was issued 700,000 options, Mr. Cox was issued 200,000 options, Mr. Thornton was issued 100,000 options, Mr. Cabell was issued 200,000 options and Mr. Clark was issued 200,000 options, to purchase common shares in the capital of our company at an exercise price of $0.045 per share until March 24, 2006.

Effective May 1, 2003, our new head office address is situate at Suite 1220 - 666 Burrard Street, Vancouver, British Columbia, Canada V6C 2X8, telephone 604.688.7450 and facsimile 604.688.5390.

On September 2, 2003 we entered into an agreement with David Lane to assist our Company in seeking out new oil and gas investment opportunities. The agreement is for a one year term and we have granted to Mr. Lane as consideration for his services incentive stock options entitling him to purchase up to an aggregate of 400,000 shares in our capital stock at a price of $0.03 per share.

On September 15, 2003, we filed a Form S-8 Registration Statement to register an aggregate total of 10,207,654 shares of our common stock in connection with a 2003 Stock Option Plan and Management Agreements with each of George Tsafalas, David Stadnyk, Winston Cabell and Byron Cox. The 2003 Stock Option Plan authorizes the issuance of a maximum of 3,607,654 common shares in the capital of Fairchild International Corporation. As well, an aggregate of 6,600,000 common shares in the capital of Fairchild International Corporation may be issuable, at the election of our company, pursuant to the Management Agreements entered into between Fairchild International Corporation and each of George Tsafalas, David Stadnyk, Winston Cabell and Byron Cox.

On October 28, 2003, we granted to David Stadnyk, one of our consultants, incentive stock options entitling him to purchase up to 700,000 shares of our capital stock at an exercise price of $0.02 per share for a two year term.

Subsequent Events

On February 18, 2004 we entered into a letter agreement with Praxis Pharmaceuticals Inc. ("Praxis") wherein we agreed to be bound by the terms of the original Termination of License and Research and Development Agreement (the "License Agreement") dated February 28, 2001. The letter agreement confirms that all amendments to such License Agreement are no longer in force and effect. As a result, Praxis will retain the common shares of Fairchild assigned to it under the terms of the License Agreement and Praxis will pay to us 30% of the Net Revenues in the License Agreement to a maximum of $250,000 over the first three years of sale; provided that we have received $59,423 from Praxis.

On February 24, 2004 we granted incentive stock options to purchase up to an aggregate of 2,100,000 shares of our common stock at a price of $0.03 per share, of which 900,000 are exercisable to February 24, 2005 and 1,200,000 are exercisable to February 24, 2009.

Plan of Operation

We intend to continue to maintain our existing oil and gas interests and look at new opportunities in the oil and gas industry. We will be primarily dependent upon proceeds from the sale of our securities for the near future. We anticipate that we will require approximately $250,000 over the twelve months ending December 31, 2004 for general and administrative expenses and approximately a further $250,000 to fund our currently proposed oil and gas exploration activities. Revenues received for our existing oil and gas interests will be applied towards our anticipated general and administrative expenses although there are no assurances that such revenues will continue to be received or be sufficient to cover our expenses. To the extent that we participate in further oil and gas exploration activities or proceed with the development stage with respect to our current property interests, we will require additional funds. There is no assurance that we will be able to obtain such additional funds on favourable terms, if at all. Our inability to raise sufficient funds could cause us to lose the existing oil and gas interests and any work conducted and/or payments made on the properties and could preclude us from participating in other exploration opportunities.

RISK FACTORS

Much of the information included in this registration statement includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgement regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements".

Our shares of common stock are considered speculative while we proceed with our commitments under the Farmout Agreement and the Participation Agreements or while we continue our search for new business opportunities. Prospective investors should consider carefully the risk factors set out below.

Lack of Experience

Management lacks technical training in the oil and gas industry and only devotes a small percentage of their time to our company's business. This lack of technical training and experience and less than full time effort might cause us to miss opportunities that more technically experienced managers would recognize and take advantage of. With no direct training or experience in these areas, our management may not be fully aware of many of the specific requirements related to working in this industry. Their decisions and choices may not be well thought out and our operations and earnings and ultimate financial success may suffer irreparable harm.

Limited Operating History and History of Losses

We have a limited oil and gas operating history and therefore have a limited history of earnings. We started our oil and gas operations in early 2002 with the acquisition of our interest in our current properties. To date, we have incurred substantial net losses. As of December 31, 2003, we had a cumulative deficit of $2,190,869. Our ability to generate significant revenues is uncertain. In order for us to make a profit, our revenues will need to increase significantly.

Lack of Financial Resources

Our ability to continue exploration and, if warranted, development of our properties will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, a portion of our interest in our properties may be lost to exploration partners or our properties may be lost entirely. We have limited financial resources and limited cash flow from operations and we are dependent for funds on our ability to sell our common shares, primarily on a private placement basis. There can be no assurance that we will be able to obtain financing on that basis in light of factors such as the market demand for our securities, the state of financial markets generally and other relevant factors. The method of financing employed by us to date results in increased dilution to the existing shareholders each time a private placement is conducted.

There can be no assurance that additional funding will be available to us for exploration and development of our projects or to fulfil our obligations under any applicable agreements. Although historically we have announced additional financings to proceed with the development of some of our previous properties, there can be no assurance that we will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of our projects with the possible loss of such properties.

Going Concern Qualification

There is substantial doubt about our ability to continue as a going concern due to the losses incurred since inception, our stockholders' deficiency, and lack of revenues.

We anticipate that we may require financing from unrelated third parties in order to continue seeking a suitable business opportunity or business combination. We anticipate that we will have sufficient capital to fund our ongoing operations until that time. However, we may be required to raise additional financing for a particular business combination or business opportunity. We would likely seek to secure any additional financing necessary through private placements of our common stock.

There can be no assurance that, if required, any such financing will be available upon terms and conditions acceptable to us, if at all. Our inability to obtain additional financing in a sufficient amount when needed and upon terms and conditions acceptable to us could have a materially adverse effect upon our company. Although we believe that we have funds sufficient to meet our immediate needs, we may require further funds to finance the development of any business opportunity that we acquire. There can be no assurance that such funds will be available or available on terms satisfactory to us. If additional funds are raised by issuing equity securities, further dilution to existing or future shareholders is likely to result. If adequate funds are not available on acceptable terms when needed, we may be required to delay, scale back or eliminate the development of any business opportunity that we acquire. Inadequate funding could also impair our ability to compete in the marketplace, which may result in the dissolution of our company.

Property Defects

We have not obtained title reports with respect to our oil and gas properties and believe our interests are valid and enforceable. The properties may be subject to prior unregistered agreements, native land claims or transfers which have not been recorded or detected through title research. Additionally, the land upon which we hold oil and gas leases may not have been surveyed; therefore, the precise area and location of such interests may be subject to challenge.

Currency Fluctuations

We maintain our accounts in US and Canadian currencies and are therefore subject to currency fluctuations and such fluctuations may materially affect our financial position and results. We do not engage in currency hedging activities.

Need to Manage Growth

In the event our properties commence production, we could experience rapid growth in revenues, personnel, complexity of administration and in other areas. There can be no assurance that we will be able to manage the significant strains that future growth may place on our administrative infrastructure, systems, and controls. If we are unable to manage future growth effectively, our business, operating results and financial condition may be materially adversely affected.

Dependence on Key Personnel/Employees

We are dependent on our ability to hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. We do not have key man insurance on any of our employees. The loss of service of any of our key personnel could have a material adverse effect on our operations or financial condition.

Dependence on Operators

Under the Farmout Agreement with Whittier and the operating agreement referred to therein, Lario Oil & Gas Co. will act as operator for the purposes of carrying out the work necessary to ensure our right to earn an interest under the Farmout Agreement and we are therefore dependent upon Lario's expertise in the area of oil and gas exploration and development.

Under the Participation Agreements with Patch, True Energy Inc. will act as operator for the purposes of carrying out the work necessary to ensure our right to earn an interest under the Participation Agreements and we are therefore dependent upon True Energy's expertise in the area of oil and gas exploration and development.

Under the Participation Agreement with Patch and PB Energy USA Inc., PB Energy will act as operator for the purposes of carrying out the work necessary to ensure our right to earn an interest under the Participation Agreement and we are therefore dependent upon PB Energy's expertise in the area of oil and gas exploration and development.

In addition given the fact we are not the operator of the wells that we have an interest in we have limited or no control over these projects and additional risks may include, but are not limited to, the following:

- limited or no control over the timing of the drilling and recompleting of wells;

- limited or no control over the timing and amounts of production;

- limited or no control over the development and operating costs;

- possible negative gas balance conditions if natural gas is ever produced as the operator may sell to another purchaser other than ours which may cause a delay in the sale of gas to our interests.

Conflicts of Interest

In addition to their interest in our company, our management currently engages, and intends to engage in the future, in the oil and gas business independently of our company. As a result, conflicts of interest between us and management of our company might arise.

"Penny Stock" Rules May Restrict the Market for the Company's Shares

Our shares of common stock are subject to rules promulgated by the Securities and Exchange Commission relating to "penny stocks," which apply to companies whose shares are not traded on a national stock exchange or on the NASDAQ system, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the Securities and Exchange Commission. These rules require brokers who sell "penny stocks" to persons other than established customers and "accredited investors" to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in the such penny stocks. These rules may discourage or restrict the ability of brokers to sell our shares of common stock and may affect the secondary market for our shares of common stock. These rules could also hamper our ability to raise funds in the primary market for our shares of common stock.

Possible Volatility of Share Prices

Our shares of common stock are currently publicly traded on the Over-the-Counter Bulletin Board service of the National Association of Securities Dealers, Inc. The trading price of our shares of common stock has been subject to wide fluctuations. Trading prices of our shares of common stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our shares of common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our shares of common stock, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

Indemnification of Directors, Officers and Others

Our by-laws contain provisions with respect to the indemnification of our officers and directors against all expenses (including, without limitation, attorneys' fees, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that the person is one of our officers or directors) incurred by an officer or director in defending any such proceeding to the maximum extent permitted by Nevada law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of our company under Nevada law or otherwise, we have been advised the opinion of the Securities and Exchange Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Future Dilution

Our constating documents authorize the issuance of 50,000,000 shares of common stock, each with a par value of $0.001 and 1,000,000 shares of preferred stock, par value $0.01. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in our control.

Anti-Takeover Provisions

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.

Risks Relating to the Industry
Oil and Gas Exploration

Exploration for economic reserves of oil and gas is subject to a number of risk factors. While the rewards to an investor can be substantial if an economically viable discovery is made, few of the properties that are explored are ultimately developed into producing oil and/or gas wells.

Potential Profitability of Oil and Gas Ventures Depends Upon Factors Beyond the Control of Our Company

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance.

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. The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. The extent of these factors cannot be accurately predicted but the combination of these factors may result in our company not receiving an adequate return on invested capital.

Competitiveness of Oil and Gas Industry

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. There can be no assurance that the necessary funds can be raised or that any projected work will be completed.

Fluctuating Price and Demand

The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable.

Comprehensive Regulation of Oil and Gas Industry

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. No assurance can be given that environmental standards imposed by federal, provincial, or local authorities will not be changed or that any such changes would not have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which it may elect not to insure against due to prohibitive premium costs and other reasons.

Environmental Regulations

In general, our exploration and production activities 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 our operations or financial condition to date. Specifically, we are 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 we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

We believe that our operations comply, in all material respects, with all applicable environmental regulations.

Our operating partners maintain insurance coverage customary to the industry; however, it is not fully insured against all environmental risks.

Risks Associated with Drilling

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labour, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

There is no way to predict in advance of drilling and testing whether any prospect encountering oil or gas will yield oil or gas in sufficient quantities to cover drilling or completion costs or to be economically viable. The seismic data, other technologies and the study of producing fields in the area do not enable us to know conclusively prior to drilling that oil or gas will be present, or if present, if it is in commercial quantities. We cannot assure that the analogies that we draw from available data from other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects.

Government Regulation/Administrative Practices

There is no assurance that the laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, will not be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on our Company. Any or all of these situations may have a negative impact on our ability to operate and/or become profitable.

Item 2. Description of Property.

Our principal executive office is located at Suite 1220 Park Place, 666 Burrard Street, Vancouver, British Columbia. We occupy the Vancouver premises on a proportional cost basis for office rent and administration services and expenses, month to month.

Item 3. Legal Proceedings.

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholders are an adverse party or has a material interest adverse to us.

Item 4. Submissions of Matters to a Vote of Security Holders.

No matter was submitted to a vote of our security holders during the fourth quarter of the fiscal year ended December 31, 2003.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Our common stock is quoted on the OTC Bulletin Board under the symbol "FRCD". Our common stock began quotation on the OTC Bulletin Board on July 8, 1998 to December 2, 1999 and since November 30, 2000. From December 2, 1999 to November 30, 2000 our common stock was quoted on the "pink sheets". The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The high and low prices of our common stock (obtained from Canada Stockwatch) for the periods indicated below are as follows:

Quarter Ended	High	Low
March 31, 2002	$0.17	$0.031
June 30, 2002	$0.19	$0.035
September 30, 2002	$0.11	$0.033
December 31, 2002	$0.045	$0.014
March 31, 2003	$0.165	$0.042
June 30, 2003	$0.096	$0.03
September 30, 2003	$0.085	$0.04
December 31, 2003	$0.085	$0.03

Our shares of common stock are issued in registered form. American Registrar and Transfer Co., 342 East 900 South, Salt Lake City, Utah 84111 (Telephone: 801.363.9065, facsimile 801.363.9066) is the registrar and transfer agent for our shares of common stock.

As of April 13, 2004, we had 31,033,044 shares of common stock outstanding and approximately 63 stockholders of record. This number of stockholders does not include stockholders who hold our securities in street name.

Dividend Policy

We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. Although there are no restrictions that limit our ability to pay dividends on our shares of common stock, we intend to retain future earnings for use in our operations and the expansion of our business.

Recent Sales of Unregistered Securities

Quarter Ended March 31, 2003

On June 25, 2002, we entered into a subscription agreement with Lura Osborne (the "Agreement"). In accordance with the terms of the Agreement, we elected to redeem Lura Osborne's right to receive Series A preferred shares under the Agreement, which right was assigned to 627239 B.C. Ltd., for 200% of the purchase price therefore, or a total of $40,000. As a result, on March 13, 2003, we elected to issue 1,000,000 shares of our common stock at a deemed price of $0.04 per share, being the closing bid price of our common shares on March 14, 2003, less 20%. These shares were issued in reliance upon Regulation S of the Securities Act of 1933.

On June 25, 2002, we entered into a subscription agreement with Orthence Cabell. In accordance with the terms of the agreement, effective March 24, 2003 we elected to redeem Mr. Cabell's right to receive Series A preferred shares under the agreement for the purchase price of $10,000 and the issuance of 142,857 shares of our common stock at a deemed price of $0.035 per share. These shares were issued in reliance upon Regulation S of the Securities Act of 1933.

Quarter Ended June 30, 2003

We did not issue any shares from treasury during the quarter ended June 30, 2003.

Quarter Ended September 30, 2003

We did not issue any shares from treasury during the quarter ended September 30, 2003.

Quarter Ended December 31, 2003

We did not issue any shares from treasury during the quarter ended December 31, 2003.

Item 6. Management's Discussions and Analysis or Plan of Operation.

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" found under "Item 1. Description of Business".

General

Through the agreements with Whittier Energy Company and Patch Energy Inc., we have earned, or have the right to earn, interests in certain oil and gas exploration and development properties.

Oil and Gas Operations

Reserves

Gilbert Lausten Jung Associates Ltd., independent geological and petroleum engineering consultants of Calgary, Alberta prepared a report effective January 1, 2004 evaluating the crude oil and natural gas reserves attributable to our assets located in Saskatchewan as follows:

Kerrobert Property, Saskatchewan, Canada

1st set of 10 wells 3.04 MSTB

2nd set of 9 wells 1.52 MSTB

H.J. Gruy & Associates Inc. prepared a report effective January 1, 2004 evaluating the crude oil and natural gas reserves attributable to our assets located in California as follows:

East Corning Property, Tehama County, California

Strange Brew #1-31 - 0.18 mmcf

Brave Ulysses #1-36 - 2.07 mmcf

Layla #1-7 - 1.04 mmcf

Feel Free #1-2 - 0 mmcf

Gross and Net wells

East Corning:L 4 gross wells and 0.13275 net wells

Kerrobert: 19 gross wells and 0.5742 net wells

Undeveloped Acreage

East Corning: net development acreage approximately 180 acres.

Kerrobert: Gross developed acreage for all 19 wells is 760 acres, of which we have 5% on the first 10 to 20 net acres and 2.5% on the next 9 net acres. Each drilling spacing unit is 40 acres. Management estimates the entire producing pool has approximately 47 section or approximately 750 wells or 30,000 developed acres.

Oil and Gas Interests

2003

2002

Balance beginning of the year

$

89,747

$

-

Expenditures

69,602

237,434

Depletion, amortization and impairment charge

(86,505)

(75,817)

Dry well and abandoned interests

-

(71,870)

Balance end of the year

$

72,844

$

89,747

Represented by:

California, U.S.A.

Producing interests subject to depletion and amortization

$

78,290

$

78,290

Accumulated depletion

(65,706)

(57,315)

12,584

20,975

Texas, U.S.A.

Non-producing interests

10,000

-

Saskatchewan, Canada

Producing interests subject to depletion and amortization

122,638

-

Accumulated depletion

(72,378)

-

Non-producing interests

-

68,772

50,260

68,772

$

72,844

$

89,747

RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES - CALIFORNIA, U.S.A.
	2003		2002

Oil and gas sales	$	49,520	$	54,406
Production costs		(14,117)		(15,245)
Depreciation, depletion, amortization and valuation provision		(14,127)		(75,817)
Dry well costs		-		(71,870)

Net income (loss) from producing activities	$	21,276	$	(108,526)

RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES - SASKATCHEWAN, CANADA
	2003		2002

Oil and gas sales	$	47,330	$	-
Production costs		(10,877)		-
Depreciation, depletion, amortization and valuation provision		(30,133)		-
Dry well costs		-		-

Net income (loss) from producing activities	$	6,320	$	-

Oil and Gas Interests - California, USA

We have a 5% working interest in three wells and a 2.7% working interest in a fourth well in Tehama County, California. We have a 3.75% interest in each of the four wells. We have conveyed to a corporate related party 20% of its interest as additional consideration for providing a loan to assist our company in acquiring its interest in the project.

Oil and Gas Interests - Saskatchewan, Canada

As at December 31, 2003, we had a 4.167% interest in the first set of ten wells drilled in Kerrobert, Saskatchewan. During the year ended December 31, 2003, we entered into a second participation agreement to earn a 1.75% interest in a second set of nine additional wells drilled. The agreements are with a company with a common officer. We have secured an option to acquire a 6.75% working interest in future oil wells in the Kerrobert drilling program.

Oil and Gas Interests - Manahuilla Creek - Texas, USA

We entered into an agreement dated November 6, 2003 to earn a 1.875% interest in a test well by incurring 1.875% of the costs associated with the acquisition of the interest. The agreements are with a company with a common officer. Refer to Note 9 of the financial statements included herein.

Oil and Gas Interest - Naftogaz, Ukraine

We entered into a memorandum of understanding dated November 7, 2003 which gives us the right to negotiate participation in any project in the Ukraine which might be secured. The agreement is with a company with a common officer.

Drilling Expenditures

In order for the Company to maintain its interest in its oil and gas prospects, it will be required to pay its proportionate share of the ongoing program expenditures.

Present Activities

There are currently no activities being undertaken on any of our projects., however we are advised by Patch that drilling is anticipated to commence shortly on the Manahuilla Creek Project in Goliad County, Texas.

Results of Operations

Fiscal Year Ended December 31, 2003 Compared to Fiscal Year Ended December 31, 2002

We incurred a net loss of $363,927 for the fiscal year ended December 31, 2003 compared to a net loss of $265,488 for the year ended December 31, 2002. The increase in the loss is due primarily a significant increase in consulting expenses, general and administrative expenses and professional fees. We have generated a cumulative loss since inception of $2,190,869. Due to our continued losses and lack of revenues there is substantial doubt about our ability to continue as a going concern.

Discussion and analysis related to significant operating activities undertaken during the year is set out below.

Lack of Revenues

At this time, our ability to generate any significant revenues continues to be uncertain. The auditor's report on our December 31, 2003 financial statements contains an additional explanatory paragraph which identifies issues that raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Expenses

Total expenses for the year ended December 31, 2003 were $476,896 compared to total expenses of $363,198 for the year ended December 31, 2002. The expenses were substantially made up of administration and consulting costs as well as professional fees.

Liquidity and Capital Resources

These financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our company has suffered recurring losses and has not generated profitable operations since inception. The continuance of our company as a going concern is dependent on obtaining financing from third parties.

We are currently relying on our existing cash reserves to fund our continuing operating expenses and to fund our interests in certain oil and gas exploration and development properties. As of December 31, 2003 and December 31, 2002, our cash and cash equivalent balances were $5,012 and $297, respectively. We would likely seek to secure any additional financing necessary through a private placement of our shares of common stock in order to fund our interests in certain oil and gas exploration and development properties.

Plan of Operation for the 12 Months ending December 31, 2004

Cash Requirements

There is substantial doubt about our ability to continue as a going concern due to the losses incurred since inception, our stockholders' deficiency, and lack of revenues.

Product Research and Development

We do not anticipate that it will expend any significant monies on research and development over the next twelve months.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment through December 31, 2004, unless we identify a suitable business opportunity or business combination that may require us to invest in such equipment.

Employees

Over the twelve months ending December 31, 2004, we anticipate an increase in the number of employees we retain only if we identify and complete the acquisition of a business opportunity or enter into a business combination. Such an increase on the number of employees may significantly increase our monthly burn rate and such increase in the monthly burn rate depends on the number of employees we ultimately retain, if any.

Item 7. Financial Statements.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

The following financial statements pertaining to Fairchild are filed as part of this annual report:

Fairchild International Corporation (audited)

Independent Auditors' Report, dated February 28, 2003, except as to Note 8 which is May 30, 2003 (Steele & Co.)

Independent Auditors' Report, dated April 8, 2004 (Morgan & Company)

Balance Sheets as at December 31, 2003 and 2002

Statements of Operations for the years ended December 31, 2003 and 2002

Statements of Changes in Stockholders' Equity for the years ended December 31, 2003 and 2002

Statements of Cash Flow for the years ended December 31, 2003 and 2002

Notes to the Financial Statements

Fairchild International Corporation
December 31, 2003

	Index

Auditors' Reports	F-1

Balance Sheets	F-3

Statements of Operations	F-4

Statement of Changes in Stockholders' Equity	F-5

Statements of Cash Flows	F-7

Notes to the Financial Statements	F-8

MORGAN & COMPANY

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of

Fairchild International Corporation

We have audited the accompanying balance sheet of Fairchild International Corporation as of December 31, 2003, and the related statements of operations, shareholders' equity, and cash flows for the year ended December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As discussed in Note 2(h) to the financial statements, the Company adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" effective January 1, 2003.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fairchild International Corporation as of December 31, 2003, and the results of their operations and their cash flows for the year ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

These financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, unless the Company attains future profitable operations and/or obtains additional financing, there is substantial doubt about the Company's ability to continue as a going concern. Management's plans in regards to these matters are discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Vancouver, BC

April 8, 2004

Tel: (604) 687-5841
Fax: (604) 687-0075
www.morgan-cas.com

"Morgan & Company"

Chartered Accountants

P.O. Box 10007 Pacific Centre
Suite 1488 - 700 West Georgia Street
Vancouver, BC V7Y 1A1

Member of ACPA International

STEELE & CO.*

CHARTERED ACCOUNTANTS

*Representing incorporated professionals

Suite 808

808 West Hastings Street

vancouver, BC Canada V6C 1C8

Telephone: (604) 687-8808

Telefax: (604) 687.2707

Email: email@steele-co.ca

INDEPENDENT AUDITORS' REPORT

To the Shareholders of

Fairchild International Corporation

We have audited the accompanying balance sheets of Fairchild International Corporation (a development stage company) as of December 31, 2002 and 2001 and the statements of operations, changes in stockholders' equity and cash flow for the years ended December 31, 2002, 2001 and 2000 and cumulative to December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fairchild International Corporation as of December 31, 2002 and 2001 and the results of its operations and its cash flow for each of the years in the three-year period ended December 31, 2002 and cumulative to December 31, 2002 in conformity with U.S. generally accepted accounting principles consistently applied.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from operations, has a net capital deficiency and there is no revenue stream from operations. As a result, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These financial statements have been restated from those previously presented as explained in Note 8.

Vancouver, Canada

February 28, 2003,

except as to Note 8 which is as of May 30, 2003

"STEELE & CO."

CHARTERED ACCOUNTANTS

FAIRCHILD INTERNATIONAL CORPORATION

Balance Sheets

(Expressed in US dollars)

	December 31, 2003 $	December 31, 2002 $

Assets

Current Assets

Cash and cash equivalents	5,012	297
Accrued revenues and other receivables	4,533	61,786
Accounts receivable - related party (Note 7)	16,119	20,000

Total Current Assets	25,664	82,083

Oil and Gas Interests, successful efforts method (Note 3)	72,844	89,747

Total Assets	98,508	171,830


Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable and accrued liabilities	22,183	11,429
Accounts payable - related parties (Note 4)	31,370	136,641
Loans payable (Note 5)	-	45,000

Total Current Liabilities	53,553	193,070


Long-term Liabilities

Asset retirement obligation	5,000	-

Total Liabilities	58,553	193,070

Stockholders' Equity (Deficit)

Preferred Stock
Authorized: 1,000,000 shares, with a $0.01 par value; none issued	-	-

Common Stock
Authorized: 50,000,000 shares, with a $0.001 par value; Issued: 29,085,586 shares (2002 - 22,651,031 shares)	29,086	22,651

Additional Paid-In Capital	2,201,738	1,783,051

Deficit	(2,190,869)	(1,826,942)

Total Stockholders' Equity (Deficit)	39,955	(21,240)

Total Liabilities And Stockholders' Equity	98,508	171,830

FAIRCHILD INTERNATIONAL CORPORATION

Statements of Operations
(Expressed in US dollars)

	Years Ended December 31,
	2003 $	2002 $

Revenues

Oil and gas	96,850	54,406

Expenses

Consulting	176,872	24,820
Depletion and amortization	43,895	51,263
Dry well costs	5,629	71,870
Financing costs	25,000	16,500
Impairment of oil and gas properties	42,610	24,554
General and administrative	22,055	13,309
Oil and gas operating	20,550	15,245
Professional fees	65,385	36,037
Related Party
Administration fees	48,500	109,600
Consulting	26,400	-

	476,896	363,198

Net Loss before discontinued operations	(380,046)	(308,792)

License Royalties (Note 7)	16,119	43,304

Net Loss	(363,927)	(265,488)

Net Loss Per Share - Basic and Diluted	$ (0.01)	$ (0.02)

Weighted Average Shares Outstanding	26,366,000	19,451,654

FAIRCHILD INTERNATIONAL CORPORATION

Statements of Changes in Stockholders' Equity

(Expressed in US dollars)

	Common Stock				Additional Paid in				Total Stockholders'
	Shares		Amount		Capital		Deficit		Equity
				$		$		$		$
Stockholders' equity (deficit) at December 31, 2001		17,074,603		17,075		1,512,657		(1,561,454)		(31,722)

Issued for cash
@ $.04/Share		1,750,000		1,750		68,250		-		70,000
@ $.07/Share		71,428		71		4,929		-		5,000

Issued for cash stock options
@ $.03/Share		1,000,000		1,000		29,000		-		30,000
@ $.06/Share		600,000		600		35,400		-		36,000
@ $.073/Share		50,000		50		3,600		-		3,650
@ $.075/Share		340,000		340		25,160		-		25,500
@ $.09/Share		400,000		400		35,600		-		36,000

Issued for unit subscription (Note 5)
@ $.011/Share		150,000		150		16,350		-		16,500

Issued for finder's fees
@ $.05/Share		60,000		60		2,940		-		3,000

Issued for related party services
@ $.018/Share		625,000		625		10,625		-		11,250
@ $.073/Share		340,000		340		24,480		-		24,820
@ $.075/Share		190,000		190		14,060		-		14,250

Net loss for the year		-		-		-		(265,488)		(265,488)

		5,576,428		5,576		270,394		(265,488)		10,482

Stockholders' equity (deficit) at December 31, 2002		22,651,031		22,651		1,783,051		(1,826,942)		(21,240)

FAIRCHILD INTERNATIONAL CORPORATION

Statements of Changes in Stockholders' Equity

(Expressed in US dollars)

	Common Stock				Additional Paid in				Total Stockholders'
	Shares		Amount		Capital		Deficit		Equity
				$		$		$		$
Stockholders' equity (deficit) at December 31, 2002		22,651,031		22,651		1,783,051		(1,826,942)		(21,240)

Issued for cash stock options
@ $.02/Share		700,000		700		13,300		-		14,000
@ $.03/Share		400,000		400		11,600		-		12,000
@ $.045/Share		200,000		200		8,800		-		9,000
@ $.06/Share		150,000		150		8,850		-		9,000
@ $.075/Share		340,440		340		25,193		-		25,533

Issued for financing cost
@ $.035/Share		142,857		143		4,857		-		5,000
@ $.04/Share		500,000		500		19,500		-		20,000

Issued for related party services
@ $.037/Share		258,150		258		9,242		-		9,500
@ $.041/Share		230,581		231		9,269		-		9,500
@ $.044/Share		363,106		363		15,637		-		16,000
@ $.047/Share		423,195		423		19,577		-		20,000

Issued for short-term debt
@ $0.04/Share		500,000		500		19,500		-		20,000
@ $.045/Share		1,316,666		1,317		57,933		-		59,250
@ $.075/Share		109,560		110		8,107		-		8,217
@ $.09/Share		800,000		800		71,200		-		72,000

Stock-based compensation		-		-		116,122		-		116,122

Net loss for the year		-		-		-		(363,927)		(363,927)

		6,434,555		6,435		418,687		(363,927)		61,195

Stockholders' equity at December 31, 2003		29,085,586		29,086		2,201,738		(2,190,869)		39,955

FAIRCHILD INTERNATIONAL CORPORATION

Statements of Cash Flows

(Expressed in US dollars)

	Years Ended December 31,
	2003 $	2002 $

Cash Flows From Operating Activities
Loss for the year	(363,927)	(265,488)
Items not involving cash:
Depletion and amortization	43,895	51,263
Dry well costs	-	71,870
Financing costs	25,000	-
Impairment of oil and gas properties	42,610	24,554
Issue of shares for services	83,500	50,320
Stock-based compensation	116,122	-
Changes in operating assets and liabilities:
Accrued revenues	57,253	(61,786)
Accounts receivable - related party	3,881	(20,000)
Accounts payable and accrued liabilities	12,454	(14,865)
Accounts payable - related parties	118,144	-

Net Cash Provided By (Used In) Operating Activities	138,932	(164,132)


Investing Activities
Oil and gas property costs	(64,602)	(234,434)

Net Cash Used In Investing Activities	(64,602)	(234,434)


Financing Activities
Proceeds from (repayments of) loans payable	(50,000)	45,000
(Repayments to) advances from related parties	(89,148)	125,081
Common stock issued for cash	69,533	222,650

Net Cash Provided By (Used in) Financing Activities	(69,615)	392,731


Increase (decrease) in Cash and Cash Equivalents	4,715	(5,835)

Cash and Cash Equivalents, Beginning of Year	297	6,132

Cash and Cash Equivalents, End of Year	5,012	297


Non-Cash Financing Activities

Stock issued for financing costs	25,000	-
Stock issued for services	83,500	50,320
Stock issued on settlement of short-term debt	130,967	-



Supplemental Disclosures

Cash paid for taxes	-	-
Cash paid for interest	-	-

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

1. Nature of Operations and Going Concern Considerations

The Company was incorporated in the State of Nevada, U.S.A. on June 20, 1997. The Company's principal business is the exploration for and production of natural gas and oil in the United States, Canada, and the Ukraine. The Company had been a development stage company in the prior year.

The Company is subject to several categories of risk associated with its activities. Natural gas and oil exploration and production is a speculative business, and involves a high degree of risk. Among the factors that have a direct bearing on the Company's prospects are uncertainties inherent in estimating natural gas and oil reserves, future hydrocarbon production, and cash flows, particularly with respect to wells that have not been fully tested and with wells having limited production histories; access to additional capital; changes in the price of natural gas and oil; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.

As of December 31, 2003, the Company had not reached a level of operations, which would finance day-to-day activities. These financial statements have been prepared on the assumption that the Company is a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate when a company is not expected to continue operations for the foreseeable future. The Company incurred losses from operations of $363,927 and $265,488 for the years ended December 31, 2003 and 2002. The Company had working capital deficiencies of $27,889 and $110,987 as of December 31, 2003 and 2002 respectively. The Company's continuation as a going concern is dependent upon its ability to attain profitable operations or raise additional capital sufficient to meet current and future obligations. Management plans to seek additional capital through private placements and public offerings of its common stock. There is no guarantee that the Company will be able to complete any of these objectives. These factors raise substantial doubt about the Company's ability to continue as a going concern.

2. Summary of Significant Accounting Policies

a) Oil and Gas Interests

The Company follows the successful efforts method of accounting for its oil and gas producing activities. Under this method, all costs associated with productive exploratory wells and productive or nonproductive development wells are capitalized while the costs of nonproductive exploratory wells are expensed. If an exploratory well finds oil and gas reserves, but a determination that such reserves can be classified as proved is not made after one year following completion of drilling, the costs of drilling are charged to operations. Indirect exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred. Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Capitalized costs of producing oil and gas properties and related support equipment, after considering estimated dismantlement and abandonment costs and estimated salvage values, are depreciated and depleted by the unit-of-production method.

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated deprecation, depletion, and amortization with a resulting gain or loss recognized in income. On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained. In joint ventured oil and gas exploration and production activities, the accounts reflect only the Company's proportionate interest in such activities.

b) Estimates and Assumptions

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amount reported in the financial statements and accompanying disclosures. Although these estimates are based on management's best knowledge of current events and actions the Company may undertake in the future, actual results ultimately may differ from the estimates. Significant estimates with regard to these financial statements include the estimate of proved natural gas and oil reserve quantities and the related present value of estimated future net cash flows therefrom. It is not possible to be certain that all aspects of environmental issues affecting the Company, if any, have been fully determined or resolved.

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

2. Summary of Significant Accounting Policies (continued)

c) Financial Instruments

The fair values of cash, accounts receivable, loans payable, accounts payable and accrued liabilities approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

d) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

e) Foreign Currency

The Company's functional and reporting currency is the United States dollar. Foreign currency transactions are primarily undertaken in Canadian dollars and are translated into United States dollars using exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured at each balance sheet date at the exchange rate prevailing at the balance sheet date. Foreign currency exchange gains and losses are charged to operations. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

f) Long-Lived Assets

Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" establishes a single accounting model for long-lived assets to be disposed of by sale including discontinued operations. SFAS 144 requires that these long-lived assets be measured at the lower of the carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. During the year, the Company recognized an impairment loss totalling $42,610 (2002 - $24,554).

g) Stock-Based Compensation

The Company has elected to apply the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Under the intrinsic value method of accounting, compensation expense is recognized if the exercise price of the Company's employee stock options is less than the market price of the underlying common stock on the date of grant. Stock-based compensation for employees is recognized on the straight-line basis over the vesting period of the individual options. Stock options granted to non-employees are accounted for under SFAS No. 123 "Accounting for Stock-Based Compensation", which establishes a fair value based method of accounting for stock-based awards, and recognizes compensation expense based on the fair market value of the stock award or fair market value of the goods and services received, whichever is more reliably measurable. Under the provisions of SFAS 123, companies that elect to account for stock-based awards in accordance with the provisions of APB 25 are required to disclose the pro forma net income (loss) that would have resulted from the use of the fair value based method under SFAS 123.

The fair value of the options granted during the period was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk free interest rate of 1.94%, expected volatility of 175%, an expected option life of three years and no expected dividends. The weighted average fair value of options granted was $0.04 per share. Had the Company determined compensation cost based on the fair value at the date of grant for its employee stock options, the net loss would have increased by $81,132 for the year ended December 31, 2003.

h) Restoration Costs

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," which is effective for fiscal years beginning after June 15, 2002. The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost should be capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. The Company adopted the new rules on asset retirement obligations on January 1, 2003 and recognized $5,000 (2002 - $NIL).

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

2. Summary of Significant Accounting Policies (continued)

i) Recent Accounting Pronouncements

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The requirements of SFAS No. 150 apply to issuers' classification and measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS No. 150 does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of this standard did not have a material effect on the Company's results of operations or financial position.

In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 expands the disclosure requirements of SFAS No. 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The disclosure provisions of SFAS No. 148 are effective for financial statements for interim periods beginning after December 15, 2002. The Company adopted SFAS No. 148 on January 1, 2003, and its impact did not have a material effect on the Company's results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The Company adopted SFAS No. 146 on January 1, 2003, and its impact did not have a material effect on the Company's results of operations or financial position.

FASB has also issued SFAS No. 145, 147 and 149 but they will not have any relationship to the operations of the Company therefore a description of each and their respective impact on the Company's operations have not been disclosed.

j) Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109 "Accounting for Income Taxes". Under SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

k) Net Loss Per Share

The Company computes net loss per share in accordance with SFAS No. 128, "Earning per Share" (SFAS 128). SFAS 128 requires presentation of both basic and diluted net loss per share (EPS) on the face of the income statement. Basic net loss per share is computed by dividing the net loss for the year by the weighted average number of shares of common stock outstanding during the year. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potential common stock outstanding during the period, if dilutive.

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

3. Oil and Gas Interests

2003

2002

OIL AND GAS INTERESTS - SUCCESSFUL EFFORTS METHOD

Balance beginning of the year

$

89,747

$

-

Expenditures

69,602

237,434

Depletion, amortization and impairment charge

(86,505)

(75,817)

Dry well and abandoned interests

-

(71,870)

Balance end of the year

$

72,844

$

89,747

Represented by:

California, U.S.A.

Producing interests subject to depletion and amortization

$

78,290

$

78,290

Accumulated depletion

(65,706)

(57,315)

12,584

20,975

Texas, U.S.A.

Non-producing interests

10,000

-

Saskatchewan, Canada

Producing interests subject to depletion and amortization

122,638

-

Accumulated depletion

(72,378)

-

Non-producing interests

-

68,772

50,260

68,772

$

72,844

$

89,747

CAPITALIZED COSTS RELATING TO OIL AND

GAS PRODUCING ACTIVITIES

DECEMBER 31,

2003

2002

Proved oil and gas properties and related equipment - California, U.S.A.

$

78,290

$

78,290

Proved oil and gas properties and related equipment - Saskatchewan, Canada

122,638

-

Non-producing oil and gas properties - Texas, U.S.A.

10,000

-

Non-producing oil and gas properties - Saskatchewan, Canada

-

68,772

Sub-total

210,928

147,062

Accumulated depreciation, depletion and amortization and valuation allowances

(138,084)

(57,315)

$

72,844

$

89,747

COSTS INCURRED IN OIL AND GAS ACQUISITION,

EXPLORATION AND DEVELOPMENT ACTIVITIES

YEAR ENDED

DECEMBER 31,

2003

2002

Acquisition of properties

Proved - California, U.S.A.

$

-

$

53,100

Proved - Saskatchewan, Canada

59,602

-

Unproved

10,000

-

Exploration costs

-

-

Development costs - California, U.S.A.

-

184,334

Development costs - Saskatchewan, Canada

-

68,772

3. Oil and Gas Interests (continued)

RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES - CALIFORNIA, U.S.A.
	2003		2002

Oil and gas sales	$	49,520	$	54,406
Production costs		(14,117)		(15,245)
Depreciation, depletion, amortization and valuation provision		(14,127)		(75,817)
Dry well costs		-		(71,870)

Net income (loss) from producing activities	$	21,276	$	(108,526)

RESULTS OF OPERATIONS FROM PRODUCING ACTIVITIES - SASKATCHEWAN, CANADA
	2003		2002

Oil and gas sales	$	47,330	$	-
Production costs		(10,877)		-
Depreciation, depletion, amortization and valuation provision		(30,133)		-
Dry well costs		-		-

Net income (loss) from producing activities	$	6,320	$	-

Oil and Gas Interests - California, USA

The Company has a 5% working interest in three wells and a 2.7% working interest in a fourth well in Tehama County, California. The Company has conveyed to a corporate related party 20% of its interest as additional consideration for providing a loan to assist the Company in acquiring its interest in the project.

In 2002, the Company acquired a 5% working interest in an 8,700 acre property in California for $115,000 and 300,000 shares issued at a value of $27,000. The Company advanced $117,354 in working interest contributions for the drilling of an initial hole which was completed and abandoned in 2002.

Oil and Gas Interests - Saskatchewan, Canada

Under a participation agreement entered into in 2002, the Company has a 4.167% working interest in the first set of ten wells drilled in Kerrobert, Saskatchewan. During the year ended December 31, 2003, the Company entered into a second participation agreement to earn a 1.75% interest in a second set of nine additional wells drilled. The agreements are with a Company with a common officer.

The Company has an option to acquire a 6.75% working interest in future oil wells in the Kerrobert drilling program.

Oil and Gas Interests - Manahuilla Creek - Texas, USA

The Company entered into an agreement dated November 6, 2003 to earn a 1.875% interest in a test well by incurring 1.875% of the costs associated with the acquisition of the interest. The agreement is with a Company with a common officer.

Oil and Gas Interest - Naftogaz, Ukraine

The Company entered into a memorandum of understanding with a company with a common officer, dated November 7, 2003, under which the Company may participate in negotiations to undertake petroleum and natural gas exploration and development activities in the Ukraine.

Mineral Interests - Manitoba, Canada

During the prior fiscal year ended December 31, 2002, the Company entered into an agreement to acquire a 100% interest in certain lands encompassed by a Special Exploration Permit, located in Northern Manitoba, Canada. The Company issued 600,000 shares at a value of $60,000 and paid $11,622. The Company abandoned its interest in the property in 2002 and recognized a charge of $71,622 to operations.

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

4. Related Party Transactions

a) The Company shares office facilities and has common management and directorships with a number of public and private corporate related parties. The Company is charged for office rentals and administrative services on a shared cost basis. Related parties include directors and officers and companies with common management and directorships. Related party accounts are unsecured with no fixed terms of interest or repayment.

b) Management agreements were entered into for administration fees with directors and officers aggregating $5,500 per month commencing April 1, 2003 and May 1, 2003, each for a term of three years. During the year ended December 31, 2003, the Company incurred administration fees of $48,500 (2002 - $109,600), and consulting fees of $26,400 (2002 - $NIL).

c) During the fiscal year ended December 31, 2002, the Company borrowed $70,000 from a company with a common officer for the acquisition of oil and gas interests in Tehama County, California. Under the terms of the loan agreement the lender exercised the conversion privilege for 1,750,000 common shares at $.04 per share. The Company conveyed to the lender, as additional consideration for granting the loan, 20% of its interest in the prospect and a right of refusal to participate as to 50% in future oil and gas prospects undertaken by the Company.

5. Loans Payable

In the fiscal year ended December 31, 2002, the Company issued 50,000 units at $1.00 per unit and each unit was initially to consist of one redeemable preferred share and three common shares. The common shares were issued for consideration equal to their market value on the date of the unit issue (150,000 shares at $0.11 per share). The preferred shares were not issued, but were exchanged for notes payable equal to the original subscription amount of $50,000. A related party subscribed for $20,000 (40%) of the financing. During the year ended December 31, 2003, these notes payable were paid and/or settled with common shares.

6. Common Stock

a. Non-cash consideration

During the year ended December 31, 2003, 3,501,258 shares of common stock were issued for non-cash consideration totalling an aggregate value of $214,467, and 1,142,857 shares of common stock were issued in settlement of notes payable totalling $20,000 and the payment of financing costs in the amount of $25,000.

b. Share Purchase Warrants

During 2002, the Company completed a private placement consisting of 636,057 units at a price of $0.1445 per unit. Each unit consisted of one share of common stock and one warrant to acquire an additional share of common stock at a price of $0.17 per share for a period of one year. During the year ended December 31, 2003, 276,000 warrants were surrendered to the Company for cancellation, and the remaining 360,057 expired.

c. Incentive Stock Options

On January 9, 2003, the Company granted options to purchase 925,000 shares at an exercise price of $0.09 per share. On March 24, 2003, the Company granted options to purchase 2,350,000 shares at an exercise price of $0.045 per share.

The Company adopted a Stock Option Plan dated September 15, 2003 ("the 2003 Stock Option Plan") under which the Company is authorized to grant options to acquire up to a total of 3,607,654 common shares. The term of any stock options granted under the plan is limited ten years. Pursuant to the 2003 Stock Option Plan, the Company granted options to consultants to purchase up to 1,100,000 common shares at exercise prices ranging from $0.02 to $0.03 per share expiring September 15, 2004 and October 28, 2004.

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

6. Common Stock (continued)

c. Incentive Stock Options (continued)

A summary of the Company's stock option activity is as follows:

December 31, 2003

December 31, 2002

Number of shares

Weighted average
exercise price

Number of shares

Weighted average
exercise price

Balance, beginning of year

970,000

$ 0.13

1,840,000

$ 0.10

Options granted

4,375,000

0.05

2,675,000

0.05

Options exercised

(4,016,666)

0.05

(3,545,000)

0.05

Options cancelled / expired

-

-

-

-

Balance, end of year

1,328,334

$ 0.10

970,000

$ 0.13

Exercise price	Weighted Average Remaining Contractual Life (in years)	December 31, 2003
Exercise price	Weighted Average Remaining Contractual Life (in years)	Outstanding	Exercisable

$0.00 - $0.05	2.23	833,334	833,334
$0.06 - $0.10	1.85	195,000	195,000
$0.21 - $0.25	0.69	300,000	300,000

		1,328,334	1,328,334

Subsequent to the year end, the Company granted options to acquire up to 2,100,000 common shares at $0.03 per share of which 900,000 are exercisable to February 24, 2005, and the remaining 1,200,000 are exercisable to February 24, 2009.

The fair value of the options granted during the period was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 1.94%, expected volatility of 175%, an expected option life of three years and no expected dividends. The weighted average fair value of options granted was $0.04 per share. Had the Company determined compensation cost based on the fair value at the date of grant for its employee stock options, the net loss would have increased by $81,132 for the year ended December 31, 2003. During the year ended December 31, 2003, the Company recognized stock-based compensation in the amount of $116,122.

The following table illustrates the effect on net loss per share as if the fair value method had been applied to all outstanding and unvested awards in each period.

	Year ended December 31,
	2003 $	2002 $

Net loss - as reported	(363,927)	(265,488)
Add: Stock-based compensation expense included in net loss - as reported	116,122	-
Deduct: Stock-based compensation expense determined under fair value method	(197,254)	-

Net loss - pro forma	(445,059)	(265,488)

Net loss per share (basic and diluted) - as reported	(0.01)	(0.02)
Net loss per share (basic and diluted) - pro forma	(0.02)	(0.02)

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

7. License

In 2000, the Company entered into a Research, Development and License Agreement to acquire an exclusive license to make, use and sell certain pharmaceutical products. The Company issued 2,600,000 common shares and paid $137,520 of its total research and development funding obligation of $250,000 as consideration for the license. On February 28, 2001, the parties terminated the Research, Development and License Agreement. As consideration for efforts made, shares issued and cash paid, the Company was entitled to a 30% net revenue royalty from licensed products to a maximum of $250,000 during the first three years of product sales.

Effective January 15, 2002, the parties agreed to place 2,355,000 of the shares in a voluntary pool and that the Company would be entitled to two-thirds of the proceeds from the sale of the shares until it had received $175,000. At that time, the net revenue royalty obligation would be considered satisfied. Insufficient proceeds were received from the sale of the shares to satisfy the Company's net revenue royalty entitlement.

Due to the inability of the Company to predict the timing of payments, the amounts are being recognized on a collected or collectible basis.

The Company entered into a letter of agreement dated February 18, 2004 with Praxis Pharmaceuticals Inc. (Praxis) where the Company and Praxis have agreed to be bound by the terms of the original Termination of License and Research and Development Agreement (the "License Agreement") dated February 28, 2001. The letter agreement confirms that all amendments to such License Agreement are no longer in force and effect. As a result, Praxis will retain the common shares of the Company assigned to it under the terms of the License Agreement and that Praxis will pay to the Company 30% of the net revenues in the License Agreement to a maximum of $250,000 over the first three years of sale; given that the Company has received $59,423 from Praxis.

8. Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has incurred net operating losses of $1,538,000, which commence expiring in 2012. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

The components of the net deferred tax asset at December 31, 2003 and 2002, and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below:

	2003 $	2002 $

Net Operating Loss	1,538,000	1,270,000

Statutory Tax Rate	34%	34%

Effective Tax Rate	-	-

Deferred Tax Asset	522,920	431,800

Valuation Allowance	(522,920)	(431,800)

Net Deferred Tax Asset	-	-

9. Subsequent Event

a. The Company entered into assignment agreements dated February 23, 2004 pursuant to the terms of a sub-participation agreement dated November 6, 2003 between the Company and Patch Energy Inc. (Patch), where the Company was granted the right to earn a 1.875% interest in the Test Well and the Program Lands, being a one-half share of the interest, in consideration of incurring an equal percentage of the costs associated with the acquisition of the Interest. The Company has assigned to two third parties one-fifth of its interest in the sub-participation agreement, being the right to earn a 0.375% interest in the Test Well and the Program Lands in consideration of these parties assuming an equal share (1/5) of the Company's costs under the sub-participation agreement.

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

10. Schedule of Supplementary Information on Oil and Gas Operations

RESERVE QUANTITY INFORMATION (UNAUDITED)

The estimated quantities of proved oil and gas reserves disclosed in the table below are based upon estimates prepared for the operator of the Company's oil and gas interests. Such estimates are inherently imprecise and may be subject to substantial revisions.

Revisions may occur because current prices of oil and gas and current costs of operating are subject to fluctuations, past performance of wells does not necessarily guarantee future performance and rates used to estimate decline of reserves could vary from that which is projected.

All quantities shown in the table are proved reserves and are located within the United States and Canada.

STANDARDIZED MEASURE OF DISCOUNTED FUTURE

NET CASH FLOWS RELATING TO PROVED OIL

AND GAS RESERVES (UNAUDITED)

YEAR ENDED

DECEMBER 31,

2003

2002

GAS

(MCF)

GAS

(MCF)

Proved, developed and undeveloped reserves (California)

Balance beginning of the period

16,380

-

Discoveries

-

34,279

Production

(13,100)

(17,899)

Balance end of the period

3,280

16,380

Standardized Measure of Discounted Future Net Cash Flows (California)

Future cash flows

$

18,770

$

62,571

Future operating expenses

(4,748)

(11,590)

14,022

50,981

10% annual discount for estimated timing of cash flows

(701)

(2,459)

Standardized measure of discounted future net cash flows

$

13,321

$

48,522

Proved, developed and undeveloped reserves (Saskatchewan)

Balance beginning of the period

-

-

Discoveries

51,567

-

Production

(47,004)

-

Balance end of the period

4,563

-

Standardized Measure of Discounted Future Net Cash Flows (Saskatchewan)

Future cash flows

$

107,687

$

-

Future operating expenses

(53,074)

-

54,613

-

10% annual discount for estimated timing of cash flows

(3,617)

-

Standardized measure of discounted future net cash flows

$

50,996

$

-

FAIRCHILD INTERNATIONAL CORPORATION

Notes to the Financial Statements
(in US Dollars)

10. Schedule of Supplementary Information on Oil and Gas Operations (continued)

RESERVE QUANTITY INFORMATION (UNAUDITED)

Future cash flows are computed by applying fiscal period end prices of natural gas and oil to period end quantities of proved natural gas and oil reserves. Future operating expenses and development costs are computed primarily by the Company's petroleum engineers by estimating the expenditures to be incurred in developing and producing the Company's proved natural gas and oil reserves at the end of the period, based on period end costs and assuming continuation of existing economic conditions.

Future income taxes are based on period end statutory rates, adjusted for tax basis and applicable tax credits. A discount factor of ten percent was used to reflect the timing of future net cash flows. The standardized measure of discounted future net cash flows is not intended to represent the replacement cost of fair value of the Company's natural gas and oil properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, and a discount factor more representative of the time value of money and the risks inherent in reserve estimate of natural gas and oil producing operations.

Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 8A. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2003, being the date of our fiscal year end covered by this Annual Report. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, George Tsafalas and Chief Financial Officer, Byron Cox upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During our fiscal year ended December 31, 2003, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

	(1)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

	(2)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

	(3)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant's assets that could have a material effect on the financial statements.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.
Directors and Executive Officers

All directors of our company hold office until the next annual meeting of the shareholders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.

As at April 13, 2004 our directors and executive officers, their ages, positions held, and duration of such, are as follows:

Name	Position Held with our Company	Age	Date First Elected or Appointed
George Tsafalas	President, Chief Executive Officer and Director	35	June 6, 2002
Byron Cox	Chief Financial Officer, Secretary, Treasurer and Director	57	May 2, 2001 June 6, 2002
John Thornton	Director	70	June 18, 2002

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

George Tsafalas, President, Chief Executive Officer and Director

Mr. Tsafalas was appointed our President, Chief Executive Officer and a director on June 6, 2002. Mr. Tsafalas has senior management experience in the oil and gas sector, as well as in the hospitality industry and professional sports sectors. He has been active in a number of business enterprises. A former resident of Calgary AB, Mr. Tsafalas has been an investor in the oil industry and maintains a significant interest in the oil patch community in that city.

Mr. Tsafalas was instrumental in negotiating the partnership on the current Kerrobert Viking Properties in Saskatchewan, Canada.

Byron Cox, Secretary and Treasurer

Mr. Cox served as our President and a director from March 12, 1999 until May 2, 2001. He currently serves as our Chief Financial Officer, Secretary and Treasurer and effective June 6, 2002 was appointed a director of our company. Since 1997 he has worked at Alexander-Cox & Company, Vancouver, British Columbia, as that company's president, where he provides investment advisory services, specializing in raising capital and investing in emerging growth companies, as well as developing investor relations programs. Mr. Cox holds a Bachelor of Arts degree from the University of Toronto, a diploma in Business Administration (Marketing) from Ryerson Polytechnic Institute, and a certificate in Strategic Marketing Management from the Harvard Business School. He holds professional accreditation in the American Public Relations Society, as well as the Canadian Public Relations Society.

In October 1997, a bankruptcy receiving order was made against Record Publishing, Inc. (Estate No: 25-060808) in Canada. Mr. Cox was an officer of this company at the time of the bankruptcy.

John Thornton, Director

Mr. Thornton has been involved in the financing and formation of public companies for over three decades.

He has served in the past as a Director on several mining and oil companies and is well known in the investment banking community.

Mr. Thornton's expertise in the financial area will assist Fairchild International in its continuing quest to participate in partnerships with oil companies drilling in development wells.

Committees of the Board

We do not have an audit or compensation committee at this time.

Family Relationships

There are no family relationships between any of our directors or executive officers.

Involvement in Certain Legal Proceedings

Other than as discussed below, none of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years:

1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Code of Ethics

We have not adopted a code of conduct. Companies whose equity securities are listed for trading on the OTCBB are not currently required to do so.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish our company with copies of all Section 16(a) reports they file.

To the best of our knowledge, all executive officers, directors and greater than 10% shareholders filed the required reports in a timely manner.

Item 10. Executive Compensation.

The following table summarizes the compensation paid to our President and Chief Executive Officer during the last three completed fiscal years. No other officers or directors received annual compensation in excess of $100,000 during the last three complete fiscal years.

		Annual Compensation			Long Term Compensation⁽¹⁾		Pay- outs
Name and Principal Position	Year	Salary	Bonus	Other Annual Compen- sation⁽²⁾	Securities Under Options/ SAR's Granted	Restricted Shares or Restricted Share Units	LTIP Pay- outs
George Tsafalas President, CEO and Director⁽¹⁾	2003 2002	$64,500⁽²⁾ $34,500⁽⁴⁾	Nil Nil	Nil Nil	1,275,000⁽³⁾ 400,000⁽⁵⁾	Nil Nil	Nil Nil
Byron Cox CFO, Secretary, Treasurer and Director	2003	$8,000⁽⁶⁾	Nil	Nil	275,000⁽⁷⁾	Nil	Nil

^{(1) Mr. Tsafalas was appointed as President and a director on June 6, 2002.
^{(2) Mr. Tsafalas was paid $24,000 as consulting fees from January 1, 2003 to and including March 31, 2003. As well, pursuant to the Management Agreement dated April 1, 2003 with George Tsafalas our company's President, we agreed to pay to Mr. Tsafalas a monthly salary of $4,500 commencing April 1, 2003 and ending March 31, 2006, representing an annual salary of $54,000 for a three year term. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Tsafalas in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 435,764 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him. In January 2004, we issued 102,272 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him for the month of December 2003.
^{(3) Incentive stock options entitling the holder to purchase up to an aggregate of: (i) 325,000 common shares at a price of $0.09 exercisable until January 9, 2006; and (ii) 950,000 common shares at a price of $0.045 exercisable until March 24, 2006. In addition, Mr. Tsafalas holds incentive stock options entitling him to purchase up to an aggregate of 400,000 common shares at a price of $0.03 per share exercisable until February 24. 2009.
^{(4) Pursuant to a management agreement entered into with our company, Mr. Tsafalas was paid $4,750 per month from June 1, 2002 to and including November 30, 2002 and $6,000 for the month of December 2002.
^{(5) Incentive stock options entitling the holder to purchase up to an aggregate of 400,000 common shares at a price of $0.075 exercisable until July 9, 2005. In addition, Mr. Tsafalas holds incentive stock options entitling him to purchase up to an aggregate of 950,000 common shares at a price of $0.045 per share exercisable until March 24, 2006.}}}}(6) Pursuant to the Management Agreement dated April 22, 2003 with Byron Cox, our company's Secretary and Treasurer, we agreed to pay to Mr. Cox a monthly salary of $1,000 commencing May 1, 2003 and ending April 30, 2004, representing an annual salary of $12,000. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Cox in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 116,834 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him. In January 2004, we issued 22,727 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him for the month of December 2003.

^{(7) Incentive stock options entitling him to purchase up to an aggregate of: (i) 75,000 common shares at a price of $0.09 per share exercisable until January 9, 2006; and (ii) 200,000 common shares at a price of $0.045 exercisable until March 24, 2006. He also holds incentive stock options entitling him to purchase up to 100,000 common shares at a price of $0.03 exercisable until February 24, 2009.
As of the date of this annual report, we have no compensatory plan or arrangement with respect to any officer that results or will result in the payment of compensation in any form from the resignation, retirement or any other termination of employment of such officer's employment with our company, from a change in control of our company or a change in such officer's responsibilities following a change in control.
Employment/Consulting Agreements
Pursuant to the Management Agreement dated April 1, 2003 with George Tsafalas our company's President, we agreed to pay to Mr. Tsafalas a monthly salary of $4,500 commencing April 1, 2003 and ending March 31, 2006, representing an annual salary of $54,000 for a three year term. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Tsafalas in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 435,764 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him. In January 2004, we issued 102,272 shares of our common stock to Mr. Tsafalas in lieu of salary otherwise payable to him for the month of December 2003.
Pursuant to the Management Agreement dated April 1, 2003 with David Stadnyk, we agreed to pay to Mr. Stadnyk a monthly salary of $4,000 commencing April 1, 2003 and ending March 31, 2006, representing an annual salary of $48,000 for a three year term Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Stadnyk in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 722,434 shares of our common stock to Mr. Stadnyk in lieu of salary otherwise payable to him.
Pursuant to the Management Agreement dated April 1, 2003 with Winston Cabell, we agreed to pay to Mr. Cabell a monthly salary of $1,000 commencing April 1, 2003 and ending March 31, 2004, representing an annual salary of $12,000 Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Cabell in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had accrued $9,000 in unpaid management fees to Mr. Cabell.
Pursuant to the Management Agreement dated April 22, 2003 with Byron Cox, our company's Secretary and Treasurer, we agreed to pay to Mr. Cox a monthly salary of $1,000 commencing May 1, 2003 and ending April 30, 2004, representing an annual salary of $12,000. Pursuant to the terms of this agreement we may satisfy our obligations in respect of payment of the salary to Mr. Cox in any month during the term of the agreement by the issuance of such number of shares of our common stock at a deemed price equal to the average bid price of our common stock on the OTC Bulletin Board for the last five trading days of such month as having a value equal to the salary then otherwise payable. For the year ended December 31, 2003, we had issued 116,834 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him. In January 2004, we issued 22,727 shares of our common stock to Mr. Cox in lieu of salary otherwise payable to him for the month of December 2003.
On September 2, 2003 we entered into an agreement with David Lane to assist our company in seeking out new oil and gas investment opportunities. The agreement is for a one year term and we have granted to Mr. Lane as consideration for his services incentive stock options entitling him to purchase up to an aggregate of 400,000 shares in our capital stock at a price of $0.03 per share.
Other than as disclosed above, we have not entered into any employment or consulting agreements with any of our current officers, directors or employees.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors. Other than the management agreements discussed above, we do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.
Stock Options/SAR Grants
The following grants of stock options or stock appreciation rights were made during the fiscal year ended December 31, 2003 to our named executive officers:
OPTIONS GRANTED TO OUR NAMED EXECUTIVE OFFICERS

IN THE YEAR ENDED DECEMBER 31, 2003

Name

Number of Shares

of Common Stock

Underlying Options

Granted

% of Total

Options

Granted⁽¹⁾

Exercise

or Base Price

($/Share)

Expiration Date

George Tsafalas

325,000⁽²⁾

950,000⁽³⁾

29%

$0.09

$0.045

January 9, 2006

March 24, 2006

Byron Cox

75,000

200,000⁽⁴⁾

.06%

$0.09

$0.045

January 9, 2006

March 24, 2006

^{(1) The total number of options to purchase common shares granted to employees/consultants/officers/directors during the fiscal year ended December 31, 2003 was 4,375,000.
^{(2) These options were exercised during the fiscal year ended December 31, 2003.
^{(3) 250,000 of these options were exercised during the fiscal year ended December 31, 2003.
^{(4) 66,666 of these options were exercised during the fiscal year ended December 31, 2003.}}}AGGREGATED OPTION/SAR EXERCISES IN THE YEAR ENDED DECEMBER 31, 2003

Name

Shares

Acquired on

Exercise (#)

Value

Realized

($)

Number of Shares

of Common Stock

Underlying

Unexercised

Options as

December 31, 2003

Exercisable/

Unexercisable

Value of

Unexercised

In-the-Money

Options at

December 31, 2003

Exercisable/

Unexercisable⁽¹⁾

George Tsafalas

595,000

$42,000

700,000/0

$3,500/$0

Byron Cox

266,666

$18,000

275,000/0

$1,000/$0

(1) The closing bid price on December 31, 2003 was $0.05.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Directors Compensation
We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended December 31, 2003.
No cash compensation was paid to any of our directors for the director's services as a director during the fiscal year ended December 31, 2003. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options. The board of directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. Other than indicated below, no director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.
During the year ended December 31, 2003 we granted the following options to purchase shares of our common stock to the following director:

Optionee

Amount

Exercise Price

Expiry Date

John Thornton

100,000

$0.045

March 24, 2006

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Principal Stockholders
The following table sets forth, as of April 13, 2004, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock, as well as by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Name and Address of Beneficial Owner

Amount and Nature of

Beneficial Ownership⁽¹⁾

Percentage

of Class⁽¹⁾

David Stadnyk

Suite 1220, 666 Burrard Street

Vancouver, BC

1,712,000⁽²⁾

0.06%

George Tsafalas

Suite 1220, 666 Burrard Street

Vancouver, BC

1,440,168⁽³⁾

0.05%

Byron Cox

Suite 1220, 666 Burrard Street

Vancouver, BC

690,488⁽⁴⁾

0.02%

John Thornton

Suite 1220, 666 Burrard Street

Vancouver, BC

220,000⁽⁵⁾

0.01%

Directors and Executive Officers as a Group

2,350,656⁽⁶⁾

0.08%

^{(1) Based on 31,033,044 shares of common stock issued and outstanding as of April 13, 2004. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.

^{(2) 768,000 of these shares are held directly by Mr. Stadnyk and 944,000 are held by Patch Energy Inc., a company which is controlled by Mr. Stadnyk.
^{(3) Includes 1,100,000 stock options exercisable within 60 days.
^{(4) Includes 358,334 stock options exercisable within 60 days.
^{(5) Includes 220,000 stock options exercisable within 60 days.
^{(6) Includes 1,678,334 stock options exercisable within 60 days.}}}}}Item 12. Certain Relationships and Related Transactions.
Except as otherwise indicated below, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $60,000, and in which, to its knowledge, any of its directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.

We share office facilities and have common management and directorships with a number of public and private corporate related parties. We are charged for office rentals and administrative services on a shared cost basis. Related parties include directors and officers and companies with common management and directorships. Related party accounts are unsecured with no fixed terms of interest or repayment.
Management agreements were entered into for administration fees with directors and officers aggregating $5,500 per month commencing April 1, 2003 and May 1, 2003. During the year ended December 31, 2003, the Company incurred administration fees of $48,500 (2002 - $109,600), and consulting fees of $26,400 (2002 - $NIL).
During the fiscal year ended December 31, 2002, we borrowed $70,000 from a company with a common officer for the acquisition of oil and gas interests in Tehama County, California. Under the terms of the loan agreement the lender exercised the conversion privilege for 1,750,000 common shares at $.04 per share. We conveyed to the lender, as additional consideration for granting the loan, 20% of its interest in the prospect and a right of refusal to participate as to 50% in future oil and gas prospects undertaken by us.

Item 13. Exhibits and Reports on Form 8-K.
Exhibits
(3) Articles of Incorporation/Bylaws
3.1 Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB filed on November 30, 1999)
3.2 Bylaws (incorporated by reference from our Registration Statement on Form 10-SB filed on November 30, 1999)
(10) Material Contracts
10.1 Stock Option Agreement between Fairchild International Corporation and George Tsafalas, dated January 9, 2003 (incorporated by reference from our Registration Statement on Form S-8 filed on January 21, 2003)
10.2 Stock Option Agreement between Fairchild International Corporation and Byron Cox, dated January 9, 2003 (incorporated by reference from our Registration Statement on Form S-8 filed on January 21, 2003)
10.3 Stock Option Agreement between Fairchild International Corporation and David Jeffery, dated January 9, 2003 (incorporated by reference from our Registration Statement on Form S-8 filed on January 21, 2003)
10.4 Stock Option Agreement between Fairchild International Corporation and David Stadnyk, dated January 9, 2003 (incorporated by reference from our Registration Statement on Form S-8 filed on January 21, 2003)
10.5 Stock Option Agreement between Fairchild International Corporation and Winston Cabell, dated January 9, 2003 (incorporated by reference from our Registration Statement on Form S-8 filed on January 21, 2003)
10.6 Stock Option Agreement between Fairchild International Corporation and George Tsafalas, dated March 24, 2003(incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.7 Stock Option Agreement between Fairchild International Corporation and Byron Cox, dated March 24, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.8 Stock Option Agreement between Fairchild International Corporation and David Stadnyk, dated March 24, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.9 Stock Option Agreement between Fairchild International Corporation and John Thornton, dated March 24, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.10 Stock Option Agreement between Fairchild International Corporation and Winston Cabell, dated March 24, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.11 Stock Option Agreement between Fairchild International Corporation and David Clark, dated March 24, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on April 15, 2003)
10.12 Management Agreement dated April 1, 2003 between Fairchild International Corporation and George Tsafalas (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.13 Management Agreement dated April 1, 2003 between Fairchild International Corporation and David Stadnyk (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.14 Management Agreement between Fairchild International Corporation and Winston Cabell, dated April 1, 2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.15 Management Agreement between Fairchild International Corporation and Byron Cox, dated April 22, 2003 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.16 Management Agreement dated May 14, 2003 between Fairchild International Corporation and George Tsafalas (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.17 Management Agreement dated May 14, 2003 between Fairchild International Corporation and David Stadnyk (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.18 Change of Control Agreement dated May 14, 2003 between Fairchild International Corporation and George Tsafalas (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.19 Change of Control Agreement dated May 14, 2003 between Fairchild International Corporation and David Stadnyk (incorporated by reference from our Quarterly Report on Form 10-QSB filed on May 22, 2003)
10.20 Letter Agreement dated September 2, 2003 between Fairchild International Corporation and David Lane (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.21 Stock Option Agreement dated September 15, 2003 between Fairchild International Corporation and David Lane (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.22 Stock Option Agreement dated October 28, 2003 between Fairchild International Corporation and David Stadnyk (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.23 Participation Agreement dated November 5, 2003 between Fairchild International Corporation and Patch Energy Inc. (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.24 Participation Agreement dated November 6, 2003 between Fairchild International Corporation and Patch Energy Inc. (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.25 Agreement dated November 7, 2003 between Fairchild International Corporation and Patch Energy Inc. re NAFTOGAZ (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 14, 2003)
10.26 Assignment Agreement dated February 23, 2004 between Fairchild International Corporation and Habanero Resources Inc.
10.27 Assignment Agreement dated February 23, 2004 between Fairchild International Corporation and Micron Enviro Systems Inc.
(31) Certifications
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32) Certifications
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarvanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarvanes-Oxley Act of 2002
Reports of Form 8-K
On February 13, 2003, we filed a current report on Form 8-K announcing that we had entered into a participation agreement with Patch Energy Inc., a private British Columbia company, in order to earn a partial interest in a further 10 well drill program.
On April 8, 2003, we filed a Current Report on Form 8K announcing that we had entered into an amendment agreement to the Participation agreement dated February 10, 2003 with Patch Energy Inc. The Amendment Agreement provides that we are now obligated to incur 2.5% of the costs associated with the second 10 well drill program on the Farmout Lands in order to earn a 1.75% interest in such wells, as opposed to incurring 1.75% of the costs as the original Participation Agreement provided for, reflecting the increased costs to which Patch is subject.
On February 27, 2004, we filed a Current Report on Form 8K announcing that we entered into a letter agreement dated February 18, 2004 with Praxis Pharmaceuticals Inc. ("Praxis") wherein we agreed to be bound by the terms of the original Termination of License and Research and Development Agreement (the "License Agreement") dated February 28, 2001. The letter agreement confirms that all amendments to such License Agreement are no longer in force and effect. As a result, Praxis will retain the common shares of Fairchild assigned to it under the terms of the License Agreement and Praxis will pay to us 30% of the Net Revenues in the License Agreement to a maximum of $250,000 over the first three years of sale; provided that we have received $59,423 from Praxis.
Item 14. Principal Accountant Fees and Services.

The aggregate fees billed for the two most recently completed fiscal years ended December 31, 2003 for professional services rendered by the principal accountant for the audit of our company's annual financial statements and review of the financial statements included our Annual Report on Form 10-KSB and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

Year Ended

December 31, 2003

December 31, 2002

Audit Related Fees

-

$8,000

Tax Fees

-

-

All Other Fees

$3,647

15,113

Total

$3,647

23,113

SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FAIRCHILD INTERNATIONAL CORPORATION

a Nevada corporation
/s/ George Tsafalas

______________________________

By: George Tsafalas, President, CEO

and Director
Date: April 15, 2004
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
/s/ George Tsafalas

_____________________________________

George Tsafalas, President,

Chief Executive Officer and Director
Date: April 15, 2004
/s/ Byron Cox

_____________________________________

Byron Cox, Secretary, Treasurer

and Director
Date: April 15, 2004
/s/ John Thornton

_____________________________________

John Thornton, Director
Date: April 15, 2004}}}}

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership⁽¹⁾	Percentage of Class⁽¹⁾
David Stadnyk Suite 1220, 666 Burrard Street Vancouver, BC	1,712,000⁽²⁾	0.06%
George Tsafalas Suite 1220, 666 Burrard Street Vancouver, BC	1,440,168⁽³⁾	0.05%
Byron Cox Suite 1220, 666 Burrard Street Vancouver, BC	690,488⁽⁴⁾	0.02%
John Thornton Suite 1220, 666 Burrard Street Vancouver, BC	220,000⁽⁵⁾	0.01%
Directors and Executive Officers as a Group	2,350,656⁽⁶⁾	0.08%

	2003		2002


Balance beginning of the year	$	89,747	$	-
Expenditures		69,602		237,434
Depletion, amortization and impairment charge		(86,505)		(75,817)
Dry well and abandoned interests		-		(71,870)

Balance end of the year	$	72,844	$	89,747

Represented by:

California, U.S.A.
Producing interests subject to depletion and amortization	$	78,290	$	78,290
Accumulated depletion		(65,706)		(57,315)

		12,584		20,975

Texas, U.S.A.
Non-producing interests		10,000		-

Saskatchewan, Canada
Producing interests subject to depletion and amortization		122,638		-
Accumulated depletion		(72,378)		-
Non-producing interests		-		68,772

		50,260		68,772

	$	72,844	$	89,747

	2003		2002

OIL AND GAS INTERESTS - SUCCESSFUL EFFORTS METHOD

Balance beginning of the year	$	89,747	$	-
Expenditures		69,602		237,434
Depletion, amortization and impairment charge		(86,505)		(75,817)
Dry well and abandoned interests		-		(71,870)

Balance end of the year	$	72,844	$	89,747

Represented by:

California, U.S.A.
Producing interests subject to depletion and amortization	$	78,290	$	78,290
Accumulated depletion		(65,706)		(57,315)

		12,584		20,975
Texas, U.S.A.
Non-producing interests		10,000		-

Saskatchewan, Canada
Producing interests subject to depletion and amortization		122,638		-
Accumulated depletion		(72,378)		-
Non-producing interests		-		68,772

		50,260		68,772

	$	72,844	$	89,747

CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES	DECEMBER 31,
	2003		2002

Proved oil and gas properties and related equipment - California, U.S.A.	$	78,290	$	78,290
Proved oil and gas properties and related equipment - Saskatchewan, Canada		122,638		-
Non-producing oil and gas properties - Texas, U.S.A.		10,000		-
Non-producing oil and gas properties - Saskatchewan, Canada		-		68,772

Sub-total		210,928		147,062
Accumulated depreciation, depletion and amortization and valuation allowances		(138,084)		(57,315)

	$	72,844	$	89,747

COSTS INCURRED IN OIL AND GAS ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES	YEAR ENDED DECEMBER 31,
	2003		2002

Acquisition of properties
Proved - California, U.S.A.	$	-	$	53,100
Proved - Saskatchewan, Canada		59,602		-
Unproved		10,000		-
Exploration costs		-		-
Development costs - California, U.S.A.		-		184,334
Development costs - Saskatchewan, Canada		-		68,772

	December 31, 2003		December 31, 2002
	Number of shares	Weighted average exercise price	Number of shares	Weighted average exercise price

Balance, beginning of year	970,000	$ 0.13	1,840,000	$ 0.10
Options granted	4,375,000	0.05	2,675,000	0.05
Options exercised	(4,016,666)	0.05	(3,545,000)	0.05
Options cancelled / expired	-	-	-	-

Balance, end of year	1,328,334	$ 0.10	970,000	$ 0.13

Proved, developed and undeveloped reserves (Saskatchewan)

Balance beginning of the period		-		-
Discoveries		51,567		-
Production		(47,004)		-

Balance end of the period		4,563		-

Standardized Measure of Discounted Future Net Cash Flows (Saskatchewan)

Future cash flows	$	107,687	$	-
Future operating expenses		(53,074)		-

		54,613		-
10% annual discount for estimated timing of cash flows		(3,617)		-

Standardized measure of discounted future net cash flows	$	50,996	$	-

Name	Number of Shares of Common Stock Underlying Options Granted	% of Total Options Granted⁽¹⁾	Exercise or Base Price ($/Share)	Expiration Date
George Tsafalas	325,000⁽²⁾ 950,000⁽³⁾	29%	$0.09 $0.045	January 9, 2006 March 24, 2006
Byron Cox	75,000 200,000⁽⁴⁾	.06%	$0.09 $0.045	January 9, 2006 March 24, 2006

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Shares of Common Stock Underlying Unexercised Options as December 31, 2003 Exercisable/ Unexercisable	Value of Unexercised In-the-Money Options at December 31, 2003 Exercisable/ Unexercisable⁽¹⁾
George Tsafalas	595,000	$42,000	700,000/0	$3,500/$0
Byron Cox	266,666	$18,000	275,000/0	$1,000/$0

Optionee	Amount	Exercise Price	Expiry Date
John Thornton	100,000	$0.045	March 24, 2006

	Year Ended
	December 31, 2003	December 31, 2002
Audit Related Fees	-	$8,000
Tax Fees	-	-
All Other Fees	$3,647	15,113
Total	$3,647	23,113