UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)
                   [X] Annual report under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                     for the fiscal year ended September 30, 2004

        [ ] Transition report under Section 13 or 15(d) of the Securities
        Exchange Act of 1934 (No fee required) for the transition period
             from ____________________ to_________________________.

                        Commission file number: 000-09419

                       MATRIX ENERGY SERVICES CORPORATION

                 (Name of Small Business Issuer in Its Charter)



 Nevada                                                         84-0811647
-------------                                           -----------------------
 (State or Other Jurisdiction                           (I.R.S. Employer
  of Incorporation or Organization)                         Identification No.)
-------------------------------------------------------------------------------

                  5416 Birchman Avenue, Fort Worth, Texas       76107
                  ---------------------------------------       ------
                 (Address of Principal Executive Offices)      (Zip Code)

                                 (817) 377-4464
                      -------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:
------------------------------------------------------------------------------
Title of Each Class                   Name of each Exchange on Which Registered
-------------------                   -----------------------------------------
Common Stock ($0.002                                 None
               Par Value)
-------------------------------------------------------------------------------
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 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 [X].

The issuer's total consolidated revenues for the year ended September 30, 2004,
were $157,833.

The aggregate market value of the registrant's Common Stock, $0.002 par value
(the only class of voting stock), held by non-affiliates was approximately
$696,502 based on the average closing bid and asked prices for the Common Stock
on December 23, 2004.

At December 23, 2004, the number of shares outstanding of the registrant's
Common Stock, $0.002 par value (the only class of voting stock), was 92,667,217.


<PAGE>





                                TABLE OF CONTENTS

                                                                           PAGE
                                     PART I


Item 1.       Description of Business........................................4

Item 2.       Description of Property........................................5

Item 3.       Legal Proceedings..............................................5

Item 4.       Submission of Matters to a Vote of Security-Holders............5


                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters.......6

Item 6.       Management's Discussion and Analysis or Plan of Operation......8

Item 7.       Financial Statements...........................................13

Item 8.       Changes in and Disagreements With Accountants
                on Accounting and Financial Disclosure.......................37

                                    PART III

Item 9.       Directors and Executive Officers...............................38

Item 10.      Executive Compensation.........................................39

Item 11.      Security Ownership of Certain Beneficial Owners and Management.40

Item 12.      Certain Relationships and Related Transactions.................41

Item 13.      Exhibits and Reports on Form 8-K...............................41

















                                        2


<PAGE>


FORWARD-LOOKING STATEMENTS

THIS ANNUAL REPORT ON FORM 10-KSB INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE"SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (THE "EXCHANGE ACT"), WHICH CAN BE IDENTIFIED BY THE USE OF
FORWARD-LOOKING TERMINOLOGY SUCH AS, "MAY," "BELIEVE," "EXPECT," "INTEND,"
"ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER
VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS FORM 10-KSB, INCLUDING WITHOUT
LIMITATION, THE STATEMENTS UNDER "BUSINESS," "PROPERTIES," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXPLORATION--LIQUIDITY AND CAPITAL RESOURCES" AND "MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND RELATED SHAREHOLDER MATTERS" LOCATED ELSEWHERE HEREIN
REGARDING THE FINANCIAL POSITION AND LIQUIDITY OF MATRIX ENERGY SERVICES CORP.
("THE COMPANY"), THE VOLUME OR DISCOUNTED PRESENT VALUE OF ITS OIL AND NATURAL
GAS RESERVES, ITS ABILITY TO SERVICE ITS INDEBTEDNESS, ITS STRATEGIC PLANS
INCLUDING ITS ABILITY TO LOCATE AND COMPLETE ACQUISITIONS OF OIL AND NATURAL GAS
ASSETS, ITS ABILITY TO LIST ITS STOCK ON THE OVER THE COUNTER ELECTRONIC
BULLETIN BOARD (OTC-EBB) AND OTHER MATTERS, ARE FORWARD-LOOKING STATEMENTS.
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH
FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS WITH RESPECT TO
ANY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS FORM 10-KSB,
INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS FORM 10-KSB. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS
HEREIN INCLUDE, BUT ARE NOT LIMITED TO, THE TIMING AND EXTENT OF CHANGES IN
COMMODITY PRICES FOR OIL AND NATURAL GAS, THE NEED TO DEVELOP AND REPLACE
RESERVES, ENVIRONMENTAL RISKS, DRILLING AND OPERATING RISKS, RISKS RELATED TO
EXPLORATION AND DEVELOPMENT, UNCERTAINTIES ABOUT THE ESTIMATES OF RESERVES,
COMPETITION, GOVERNMENT REGULATION AND THE ABILITY OF THE COMPANY TO MEET ITS
STATED BUSINESS GOALS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.



























                                        3


<PAGE>




                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business Development

As used herein, the term "Company" refers to Matrix Energy Services Corporation
(formerly Power Exploration, Inc.), a Nevada corporation, and its subsidiaries
and predecessors, unless the context indicates otherwise. Originally
incorporated on October 31, 1979 in Colorado as Imperial Energy Corp., the
Company adopted its present name in May of 2002. During its history, the Company
has changed its name several times. At different times the Company has been
known as Imperial Energy Corp., Funscape Corp., Oil Retrieval Systems, Inc.,
Titan Energy Corp., Inc. and Power Exploration, Inc. Current management obtained
controlling ownership of the Company in October of 1999. The Company changed its
domicile to Nevada on May 31, 1998 through a merger of Titan Energy Corp., Inc.,
a Colorado Corporation, with a Nevada corporation bearing the name Power
Exploration, Inc.


Business of the Issuer

Oil and natural gas were the principal products currently produced by the
Company. The Company did not refine or process the oil and natural gas that it
produced. The Company sold the oil it produced under short-term contracts at
market prices in the areas in which the producing properties are located,
generally at F.O.B. field prices posted by the principal purchaser of oil in
such areas.

The Company had focused its exploration efforts on its holdings in Texas. The
Company was redeveloping existing fields in and around Corsicana, Texas and
other areas of the region where fields have been partially depleted by
conventional production methods, but where significant, proven reserves of oil
and gas still remain. These fields can become commercially viable and provide
long-term revenue streams utilizing the latest technology. However, inadequate
capital and new restrictions of some of these technologies imposed by the State
of Texas impede the ability of the Company to generate returns on these fields.

The primary asset of the Company, the Corsicana leases, was comprised of
approximately 8,000 leasehold acres and 900 wells, of which 200 were producing.

On September 9, 2004, the Board of Directors for Matrix Energy Services, Corp.
held a meeting of its Board of Directors. The members of the Board, M.O. Rife
III, Joe Bill Bennett and Mark Zouvas were present. The purpose of this meeting
was to discuss the inability of the Company to pay its joint operating expenses
on its Corsicana leasehold, which controls approximately 200 producing wells and
700 non-producing wells in Corsicana, Texas. The Board made the following
motions and accepted the following resolutions.

In 1997, the Company, under its predecessor name, Titan Energy Corp. executed a
joint operating agreement with Rife Oil Properties, Inc., to operate the wells
located on the Corsicana leasehold. Texas M.O.R., Inc., d/b/a Rife Oil
Properties assumed the responsibilities for operating the Corsicana field on
September 30, 2003. Texas M.O.R., Inc., d/b/a Rife Oil Properties is owned and
controlled by M.O. Rife III. Mr. Rife is also the Chairman of the Board of
Matrix Energy Services Corp. and was Chairman of the Board of Titan Energy Corp.
at the time of the execution of the operating agreement.

Provisions within the operating agreement between Rife Oil Properties, Inc.,
which was assumed by Texas M.O.R., Inc., d/b/a Rife Oil Properties, and the
Company provide for the operator to take title and possession of the contract
area (Corsicana Leasehold) in the event the non-operator (Matrix) cannot pay its
joint operating expenses within sixty (60) days of the due date of the operating
expense invoices. Transference of the leasehold estate under this scenario is
through judicial proceedings.

The Company has not been able to pay its joint operating invoices for the
Corsicana leasehold for past eighteen months. Prior to that point in time,
operating deficits for the Corsicana property had been funded through a series
of loans made to the Company by related parties. The current amount owed to
Texas M.O.R., Inc., d/b/a Rife Oil Properties from Matrix for joint operating
expenses is $136,117.11.

Recently, the State of Texas declared swabbing, which is the process of lifting
oil from depleted wells via mobile unit, to be detrimental to the environment
and have informed all operators to cease swabbing operations. The Corsicana
property derived a majority of its revenue from swabbing the wells in the
leasehold. The Company does not believe the property can generate enough revenue
to cover its costs in this environment.


                                        4

<PAGE>



To avoid judicial proceedings and the appurtenant costs associated with an
action, The Company and has elected to consent to the forfeiture of its interest
in the Corsicana leasehold to the operator, Texas M.O.R., Inc., d/b/a Rife Oil
Properties in lieu of its outstanding debt relating to the joint operating
expenses.

On November 27, 2003, the Company, through its wholly-owned partnership, Spartan
Resource Partners, GP, executed a farm-out agreement with Jerry Witte, a
geologist, ("Witte") granting him the right to drill a test well on its
leasehold in Corsicana. The Company retained a 10% carried working interest in
the well and has granted an additional area of mutual interest to Witte for one
thousand acres or 25 additional wells. Drilling commenced in April of 2004 and
three wells have been drilled to date. The production results of the drilling
were less than what was expected. Mr. Witte will continue to explore for
production under the farm-out agreement, which was assumed by Texas M.O.R.,
Inc., d/b/a Rife Oil Properties as part of the relinquishment of the Corsicana
asset by the Company.

The Company is actively seeking additional acquisitions and merger candidates.
Issuing or exchanging securities of the Company for assets or securities of the
company to be acquired or merged, or by selling its securities to the public and
using the proceeds for an acquisition or merger. Such transactions may be
accomplished by an action of the Board of Directors, with or without a vote of
the shareholders, which is in compliance with the Company's Articles of
Incorporation, its By-laws and applicable laws. The Company will not consider a
"hostile takeover," and intends to acquire other businesses and/or assets only
on a mutually agreeable basis.

As of September 30, 2004, the Company employed 3 persons all of whom are engaged
in office and administrative activities.


ITEM 2. DESCRIPTION OF PROPERTIES

Facilities

The Company leases approximately 266 square feet of office space in Fort Worth,
Texas, for its corporate offices. The month-to month lease requires a monthly
rental payment of $400. The Company considers this space adequate for its
present needs.


ITEM 3. LEGAL PROCEEDINGS

On May 2, 2003, a default judgment was issued against the Company for nonpayment
of services by an operator in the amount of $128,000 plus interest at 10% and
court costs. The Company was not aware of their judgment until late October
2004, and a liability has been recorded in accrued liabilities in the amount of
$151,106 with the corresponding amount charged to general and administrative
expenses.

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

During the fiscal year ended September 30, 2004, no matters were submitted by
the Company to a vote of its shareholders.

















                                        5

<PAGE>



                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

Market Information

The Company's Common Stock is currently quoted on the Electronic Bulletin Board
under the symbol "MXES," but there is limited trading in the Common Stock. The
following table sets forth the high and low bid prices from October 1, 2002
through September 30, 2004, based upon quotations periodically published on the
OTC. All price quotations represent prices between dealers, without retail
mark-ups, mark-downs or commissions and may not represent actual transactions.



                                                        HIGH              LOW

Fiscal Year ended September 30, 2003
     October, November, & December, 2002               $ 1.92           $ 0.25
     January, February, & March, 2003                  $ 0.49           $ 0.08
     April, May,& June, 2003                           $ 0.13           $ 0.01
     July, August,& September, 2003                    $ 0.07           $ 0.04

Fiscal Year ended September 30, 2004
     October, November, & December, 2003               $ 0.07           $ 0.04
     January, February, & March, 2004                  $ 0.06           $ 0.03
     April, May, & June, 2004                          $ 0.05           $ 0.03
     July, August, & September, 2004                   $ 0.03           $ 0.02



The bid price for the Common Stock was $0.016 on December 23, 2004. The above
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions.


























                                        6


<PAGE>




Shareholders

According to the records of the Company's transfer agent, there were 2,505
holders of record who held 92,667,217 shares of the Company's Common Stock on
September 30, 2004 (including nominee holders such as banks and brokerage firms
who hold shares for beneficial holders).1

Dividends

The Company has not paid any cash dividends on its Common Stock, and does not
anticipate paying cash dividends on its Common Stock in the next year. The
Company anticipates that any income generated in the foreseeable future will be
retained for the development and expansion of its business. Future dividend
policy is subject to the discretion of the Board of Directors and will depend
upon a number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors deems relevant.

Recent Sales of Unregistered Securities

The following is a list of all securities sold by the Company within the period
covered by this report, including, where applicable, the identity of the person
who purchased the securities, title of the securities, and the date sold.

The Company was indebted to Business Exchange Investment, Inc. under terms of a
promissory note dated September 15, 1998. Terms of the note provide for interest
at a rate of 10% per annum with an extended maturity date of September 15, 2004.
The note is collateralized by 100% of the shares of Power Operating, Inc., an
inactive subsidiary owned by the Company. On September 9, 2004, the $250,000
note, plus accrued interest of $128,684 was exchanged for 25,245,586 shares of
the Company's common stock at $.015 per share, the quoted market price of the
stock on the day the issuance of stock was authorized.

The Company was indebted to MOROIL, Inc. under the terms of a 5% promissory note
dated July 16, 2002, with an extended maturity date of September 1, 2004. From
October 1, 2003 to September 9, 2004, MOROIL, Inc. advanced additional operating
loans and accrued additional interest aggregating $216,308. On September 9,
2004, this total debt of $249,753 was converted to 16,650,229 shares of the
Company's common stock at $.015 per share, the quoted market price of the stock
on the day the issuance of stock was authorized.


























                                        7


<PAGE>



ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The Company's operations consisted primarily of exploration and development of
oil and gas properties, and redevelopment of currently producing oil and gas
fields. While oil and natural gas were the principal products currently produced
by the Company, the Company does not refine or process the oil and natural gas
that it produces. The Company sold the oil it produced under short-term
contracts at market prices in the areas in which the producing properties are
located, generally at F.O.B. field prices posted by the principal purchaser of
oil in such areas.

Results of Operations

Revenues

The Company's oil and gas sales increased $5,081 or 3%, to $157,833 for the
fiscal year ended September 30, 2004 from $152,752 for the fiscal year ended
September 30, 2003. Revenues from the sales of oil and gas increased primarily
because of a sustained increase in oil prices.

Costs and Expenses


<TABLE>
<CAPTION>

                                                  2004             %              2003           %
The Company's general and                       ----------     -------         ----------      -------
administrative expenses decreased
$2,041,136, or 86.5%, to $317,243 for
the fiscal year ended September 30,
2004 from $2,358,379 for the fiscal year
ended September 30, 2003. The change in
the dollar amount of general and
administrative expenses was due primarily
to a decrease in consulting fees, which
accounted for 91% of all general and
administrative expenses in 2003. The
following summarizes the general and
administrative expenses:

<S>                                              <C>            <C>            <C>             <C>
     Consulting Fees                             $  93,750      29.6           $2,147,189      91.0
     Legal Fees and Settlements                    151,496      47.7                8,473       0.4
     Salaries and Benefits                          21,340       6.7               86,640       3.7
     Other                                          50,657      16.0              116,077       4.9
                                                 ---------      ----            ---------      -----

                                                 $ 317,243     100.0%          $2,358,379     100.0%
                                                 =========     ======           =========     ======
</TABLE>


In 2002, the Company used its common shares as payment to consultants for
services through March, 2004. The fair values of these shares resulted in
extremely large charges to operations. The Company amortized $93,750 and
$2,128,044 of these prepaid consulting fees in 2004 and 2003, respectively. (see
note 6 of the financial statements)

The lease operating expenses increased by $12,571, or 5.5%, to $241,019 in 2004,
compared to $228,448 in 2003. The increase was primarily due to an increase in
insurance cost and repairs, and maintenance costs. For the year ended September
30, 2004, there were only eleven months of lease operating expense, as the
Corsicana property was lost to repossession by Texas M.O.R., Inc., d/b/a Rife
Oil Properties, the Operator, on September 1, 2004 for non-payment of operating
expenses (see Note 1 to the financial statements).

In 2004, the interest expense decreased by $8,213, or 22% to $29,134, compared
to $37,347 in 2003. The decrease is primarily the result of the Company paying
down the debt throughout 2003. The Company liquidated most of its debt on
September 9, 2004 by issuing 16,650,229 and 25,245,586 shares of common stock
valued at $.015 in payment of accounts payable, accrued liabilities, and notes
payable to MOROIL, Inc., a related party, and Business Exchange Investments,
Inc, respectively (see Note 1 and Note 2 to the financial statements).


                                        8



<PAGE>


Net Income (Loss)

Net loss for the fiscal year ended September 30, 2004 was $1,236,893, or $.02
per share, compared to a loss of $4,360,379, or $.09 per share, for the fiscal
year ended September 30, 2003. This $3,123,486 decrease in loss was primarily
the result a decrease in the amortization of prepaid consulting fees in 2004
(see note 6 to the financial statements) and the disposal of the BLM acreage in
2003 (see note 11 to the financial statements). Net cash used in operating
activities was $326,796 for the fiscal year ended September 30, 2003, and
$39,956 for the fiscal year ended September 30, 2004.

Liquidity and Capital Resources

The Company's working capital deficit on September 30, 2004 was $149,433
compared to a deficit of $479,440 on September 30, 2003. This $330,007 increase
in working capital resulted primarily from the settlement of current liabilities
in 2004 through the issuance of the Company's common stock as discussed above
(see Note 1 and Note 2 to the financial statements).

Non Cash Transactions

During the year ended September 30, 2004, the Company relinquished ownership in
the Corsicana properties as discussed previously, which resulted in a $789,787
loss for the Company (see Note 1 to the financial statements). The Company also
issued 41,895,815 shares of its common stock in settlement of current debt as
discussed previously (see Note 1 and Note 2 to the financial statements).

The Company was indebted to Business Exchange Investment, Inc. under terms of a
promissory note dated September 15, 1998. Terms of the note provide for interest
at a rate of 10% per annum with an extended maturity date of September 15, 2004.
The note is collateralized by 100% of the shares of Power Operating, Inc., an
inactive subsidiary owned by the Company. On September 9, 2004, the $250,000
note, plus accrued interest of $128,684 was exchanged for 25,245,586 shares of
the Company's common stock at $.015 per share, the quoted market price of the
stock on the day the issuance of stock was authorized.

The Company was indebted to MOROIL, Inc. under the terms of a 5% promissory note
dated July 16, 2002, with an extended maturity date of September 1, 2004. From
October 1, 2003 to September 9, 2004, MOROIL, Inc. advanced additional operating
loans and accrued additional interest aggregating $216,308. On September 9,
2004, this total debt of $249,753 was converted to 16,650,229 shares of the
Company's common stock at $.015 per share, the quoted market price of the stock
on the day the issuance of stock was authorized.

The Company was indebted to Peric Consulting, LLC, a company managed by the
Company's Chief Financial Officer, under the terms of a 6% promissory note dated
March 15, 2003, in the amount of $48,500. The note plus accrued interest
aggregating $53,180 was assumed by MOROIL, Inc. on September 9, 2004.

During the year ended September 30, 2003, the Company cancelled 2,000,000 shares
of its common stock valued at $100,000. The Company issued the stock during the
year ended September 30, 2002 at a value of $2,000,000 for the acquisition of
Oil and Gas Properties. Because of this change in value, the cancellation of the
stock resulted in a $1,900,000 loss for the Company (see note 11 to the
financial statements).

Long-Term Debt

On September 30, 2004, the Company had no long-term debt.

History of Losses

The Company had net losses of $1,236,893 and $4,360,379, for the years ended
September 30, 2004 and September 30, 2003, respectively. The Company may
continue to incur net losses and, to the extent that it remains without
operational funding, such losses may continue.







                                        9

<PAGE>




Need for Additional Financing for Growth

The growth of the Company's business will require substantial capital on a
continuing basis, and there is no assurance that any such required additional
capital will be available on satisfactory terms and conditions, if at all. There
is also no assurance that the Company will not pursue, from time to time,
opportunities to acquire oil and natural gas properties and businesses that may
utilize the capital currently expected to be available for its present
operations. The amount and timing of the Company's future capital requirements,
if any, will depend upon a number of factors, including drilling costs,
transportation costs, equipment costs, marketing expenses, staffing levels and
competitive conditions, and any purchases or dispositions of assets, many of
which are not within the Company's control. Failure to obtain any required
additional financing could materially adversely affect the growth, cash flow and
earnings of the Company. In addition, the Company's pursuit of additional
capital could result in the incurrence of additional debt or potentially
dilutive issuances of additional equity securities.

The Company's ability to meet any future debt service obligations will be
dependent upon the Company's future performance, which will be subject to its
future acquisitions and/or mergers, the Company's level of production, general
economic conditions and financial, business and other factors affecting the
operations of the Company, many of which are beyond its control. There can be no
assurance that the Company's future performance will not be adversely affected
by such changes in oil and natural gas prices and/or production nor by such
economic conditions and/or financial, business and other factors. In addition,
there can be no assurance that the Company's business will generate sufficient
cash flow from operations or that future bank credit will be available in an
amount to enable the Company to service its indebtedness or make necessary
expenditures. In such event, the Company would be required to obtain such
financing from the sale of equity securities or other debt financing. There can
be no assurance that any such financing will be available on terms acceptable to
the Company. Should sufficient capital not be available, the Company may not be
able to continue to implement its business strategy.


Acquisition Risks

The Company's business strategy will focus on acquisitions of producing oil and
natural gas properties. Any such future acquisitions will require an assessment
of the recoverable reserves, future oil and natural gas prices, operating costs,
potential environmental and other liabilities and other similar factors. It
generally is not feasible to review in detail every individual property involved
in an acquisition. Ordinarily, review efforts are focused on the higher-valued
properties. However, even a detailed review of all properties and records may
not reveal existing or potential problems; nor will it permit the Company to
become sufficiently familiar with the properties to assess fully their
deficiencies and capabilities. Inspections are not always performed on every
well, and potential problems, such as mechanical integrity of equipment and
environmental conditions that may require significant remedial expenditures, are
not necessarily observable even when an inspection is undertaken. Even if
problems are identified, the seller may be unwilling or unable to provide
effective contractual protection against all or part of such problems. There can
be no assurance that oil and natural gas properties acquired by the Company will
be successfully integrated into the Company's operations or will achieve desired
profitability objectives.

Drilling Risks

The Company's drilling involves numerous risks, including the risk that no
commercially productive natural gas or oil reservoirs will be encountered. The
Company must incur significant expenditures for the identification and
acquisition of properties and for the drilling and completion of wells. The cost
of drilling, completing and operating wells is often uncertain, and drilling
operations may be curtailed, delayed or canceled as a result of a variety of
factors, including unexpected drilling conditions, pressure or irregularities in
formations, equipment failures or accidents, weather conditions and shortages or
delays in the delivery of equipment. In addition, any use by the Company of
3-dimensional seismic and other advanced technology requires greater
pre-drilling expenditures than traditional drilling strategies. There can be no
assurance as to the success of the Company's future drilling activities.











                                       10

<PAGE>



Uncertainty of Estimates of Oil and Natural Gas Reserves

Numerous uncertainties are inherent in estimating quantities of proved oil and
natural gas reserves, including many factors beyond the control of the Company.
Such estimates rely upon various assumptions, including assumptions required by
the Securities and Exchange Commission (the "Commission"), as to constant oil
and natural gas prices, drilling and operating expenses, capital expenditures,
taxes and availability of funds and such reports should not be construed as the
current market value of the estimated proved reserves. The process of estimating
oil and natural gas reserves is complex, requiring significant decisions and
assumptions in the evaluation of available geological, engineering and economic
data for each reservoir. As a result, such estimates are inherently an imprecise
evaluation of reserve quantities and future net revenue. Actual future
production, revenue, taxes, development expenditures, operating expenses and
quantities of recoverable oil and natural gas reserves may vary substantially
from those assumed in the estimate. In addition, the Company's reserves may be
subject to downward or upward revision, based upon production history, results
of future exploration and development, prevailing oil and natural gas prices and
other factors.

Inability to Develop Additional Reserves

The Company's future success as an oil and natural gas producer, as is generally
the case in the industry, depends upon its ability to find, develop and acquire
additional oil and natural gas reserves that are economically recoverable.
Except to the extent that the Company conducts successful development activities
or acquires properties containing proved reserves, the Company's proved reserves
will generally decline as reserves are produced. There can be no assurance that
the Company will be able to locate additional reserves or that the Company will
drill economically productive wells or acquire properties containing proved
reserves.

Certain Industry and Marketing Risks

The Company's operations are subject to the risks and uncertainties associated
with drilling for, producing and transporting of oil and natural gas. The
Company's future ability to market its natural gas and oil production will
depend upon the availability and capacity of natural gas gathering systems and
pipelines and other transportation facilities. Federal and state regulation of
oil and natural gas production and transportation, general economic conditions,
changes in supply and in demand all could materially adversely affect the
Company's ability to market its oil and natural gas production.

Effects of Changing Prices

The future financial condition and results of operations of the Company depend
upon the prices it receives for its oil and natural gas and the costs of
acquiring, developing and producing oil and natural gas. Oil and natural gas
prices have historically been volatile and are subject to fluctuations in
response to changes in supply, market uncertainty and a variety of additional
factors that are also beyond the Company's control. These factors include,
without limitation, the level of domestic production, the availability of
imported oil and natural gas, actions taken by foreign oil and natural gas
producing nations, the availability of transportation systems with adequate
capacity, the availability of competitive fuels, fluctuating and seasonal demand
for natural gas, conservation and the extent of governmental regulation of
production, weather, foreign and domestic government relations, the price of
domestic and imported oil and natural gas, and the overall economic environment.
A substantial or extended decline in oil and/or natural gas prices could have a
material adverse effect on the Company's estimated value of its natural gas and
oil reserves, and on its financial position, results of operations and access to
capital. The Company's ability to maintain or increase its borrowing capacity,
to repay current or future indebtedness and to obtain additional capital on
attractive terms is substantially dependent upon oil and natural gas prices. The
Company uses the full cost method of accounting for its investment in oil and
gas properties. Under the full cost method of accounting, all costs of
acquisition, exploration and development of oil and gas reserves are capitalized
into a "full cost pool" as incurred, and properties in the pool are depleted and
charged to operations using the unit-of-production method based on the ratio of
current production to total proved oil and gas reserves. To the extent that such
capitalized costs (net of accumulated depreciation, depletion and amortization)
less deferred taxes exceed the SEC PV-10 (present value discounted at 10% as
dictated by the SEC) of estimated future net cash flow from proved reserves of
oil and gas, and the lower of cost or fair value of unproved properties after
income tax effects, such excess costs are charged against earnings. Once
incurred, a write-down of oil and gas properties is not reversible at a later
date even if oil or gas prices increase.







                                       11


<PAGE>




Operating Hazards and Uninsured Risks

The Company's operations are subject to the risks inherent in the oil and
natural gas industry, including the risks of fire, explosions, blow-outs, pipe
failure, abnormally pressured formations and environmental accidents such as oil
spills, gas leaks, ruptures or discharges of toxic gases, brine or well fluids
into the environment (including groundwater contamination). The occurrence of
any of these risks could result in substantial losses to the Company due to
injury or loss of life, severe damage to or destruction of property, natural
resources and, equipment, pollution or other environmental damage, clean-up
responsibilities, regulatory investigation and penalties and suspension of
operations. In accordance with customary industry practice, the Company
maintains insurance against some, but not all, of the risks described above.
There can be no assurance that any insurance maintained by the Company will be
adequate to cover any such losses or liabilities. Further, the Company cannot
predict the continued availability of insurance, or availability at commercially
acceptable premium levels. The Company does not carry business interruption
insurance. Losses and liabilities arising from uninsured or under-insured events
could have a material adverse effect on the financial condition and operations
of the Company. From time to time, due primarily to contract terms, pipeline
interruptions or weather conditions, the producing wells in which the Company
owns an interest have been subject to production curtailments. The curtailments
range from production being partially restricted to wells being completely
shut-in. The duration of curtailments varies from a few days to several months.
In most cases the Company is provided only limited notice as to when production
will be curtailed and the duration of such curtailments. The Company is not
currently experiencing any material curtailment on its production.

Inflation and Changing Prices

The impact of inflation, as always, is difficult to assess. In 1997 and through
the first quarter of 1998, the Company has experienced a weakness in prices
received for its oil and natural gas production. In the year 2000, the Company
experienced a significant increase in the prices received for its oil and
natural gas production. The Company cannot anticipate whether the present level
of inflation will remain, however, a sudden increase in inflation and/or an
increase in operating costs or drilling costs coupled with a reversal of current
pricing could have an adverse effect on the operations of the Company.
































                                       12


<PAGE>


 ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following pages contain the audited financial statements and accompanying
notes as prepared by the Company's independent auditors.






















































                                       13


<PAGE>








                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY


                                TABLE OF CONTENTS



                                                                          Page

Report of Independent Registered Public Accounting Firm
   Killman, Murrell & Co., P.C.                                           F-2

Financial Statements

   Consolidated Balance Sheets as of September 30, 2004 and 2003          F-3

   Consolidated Statements of Operations for the Years
        Ended September 30, 2004 and 2003                                 F-5

   Consolidated Statements of Stockholders' (Deficit)
        Equity and Comprehensive Loss for the Years Ended
        September 30, 2004 and 2003                                       F-7

   Consolidated Statements of Cash Flows for the Years
        Ended September 30, 2004 and 2003                                 F-8

   Notes to Consolidated Financial Statements                             F-10





















                                       F-1

<PAGE>









             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
Matrix Energy Services Corporation and Subsidiary
Fort Worth, Texas

We have audited the accompanying consolidated balance sheets of Matrix Energy
Services Corporation and Subsidiary as of September 30, 2004 and 2003, and the
related consolidated statements of operations, stockholders' (deficit) equity
and comprehensive loss, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Matrix
Energy Services Corporation and Subsidiary as of September 30, 2004 and 2003,
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with United States generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and its limited capital resources raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are described in Note 9. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Killman, Murrell & Co., P.C.
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
November 22, 2004



                                       F-2


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                           SEPTEMBER 30, 2004 AND 2003

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                  2004                   2003
                                                                              -------------          --------
CURRENT ASSETS
<S>                                                                           <C>                    <C>
    Cash                                                                      $      1,673           $     15,396
    Current Portion of Prepaid Consulting - Note 6                                       -                 93,750
                                                                              ------------           ------------

            TOTAL CURRENT ASSETS                                                     1,673                109,146
                                                                              ------------           ------------

OIL AND GAS PROPERTIES,
    FULL COST METHOD - Note 11                                                           -              1,000,000
        Less: Accumulated Depreciation, Depletion and
        Amortization                                                                     -                (72,098)
                                                                              ------------           ------------

            NET OIL AND GAS PROPERTIES                                                   -                927,902
                                                                              ------------           ------------

OFFICE  EQUIPMENT, Net of Accumulated
    Depreciation of $3,540                                                               -                  7,136
                                                                              ------------           ------------

OTHER ASSETS
    Investments Available - For - Sale - Note 10                                         -                      -
    Other                                                                                -                  3,425
                                                                              ------------           ------------

            TOTAL OTHER ASSETS                                                           -                  3,425
                                                                              ------------           ------------

            TOTAL ASSETS                                                      $      1,673           $  1,047,609
                                                                              ============           ============
</TABLE>















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

                                       F-3


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

                           SEPTEMBER 30, 2004 AND 2003

                 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
<TABLE>
<CAPTION>

                                                                                  2004                   2003
                                                                              -------------          --------

CURRENT LIABILITIES
<S>                                                                           <C>                    <C>
    Accounts Payable and Accrued Expenses                                     $     151,106          $     160,009
    Accounts Payable - Related Parties                                                    -                 96,632
    Note Payable - Note 2                                                                 -                250,000
    Notes Payable - Related Parties - Note 2                                              -                 81,945
                                                                              -------------          -------------

            TOTAL CURRENT LIABILITIES                                               151,106                588,586
                                                                              -------------          -------------

COMMITMENTS AND CONTENGENCIES - Note 7                                                    -                      -

STOCKHOLDERS' (DEFICIT) EQUITY - Note 8 Common Stock, $.002 par value,
    500,000,000 Shares
        Authorized, 92,667,217 and 50,771,402 Shares Issued
        and Outstanding, respectively                                               185,334                101,543
    Additional Paid-In Capital                                                   46,740,082             46,195,436
    Retained Deficit                                                            (42,054,849)           (40,817,956)
    Unrealized Loss on Securities
        Available-for-Sale - Note 10                                             (5,020,000)            (5,020,000)
                                                                              -------------          -------------

            TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                                   (149,433)               459,023
                                                                              -------------          -------------

            TOTAL LIABILITIES AND
                STOCKHOLDERS' (DEFICIT) EQUITY                                $       1,673          $   1,047,609
                                                                              =============          =============
</TABLE>










..




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

                                       F-4

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>

                                                                                 2004                   2003
                                                                             --------------         --------------

<S>                                                                          <C>                    <C>
REVENUE - Oil and Gas Sales                                                  $      157,833         $      152,752
                                                                             --------------         --------------

COST OF REVENUE
     Lease Operating                                                                241,019                228,448
     Production Taxes                                                                 7,300                  7,072
     Depreciation, Depletion and Amortization                                        14,483                 18,313
                                                                             --------------         --------------

         TOTAL COST OF REVENUES                                                     262,802                253,833
                                                                             --------------         --------------

            GROSS LOSS                                                             (104,969)              (101,081)
                                                                             --------------         --------------

EXPENSES
     General and Administrative                                                     317,243              2,358,379
     Interest Expense                                                                29,134                 37,347
                                                                             --------------         --------------

         TOTAL EXPENSES                                                             346,377              2,395,726
                                                                             --------------         --------------

            LOSS BEFORE OTHER INCOME
(EXPENSES) AND INCOME TAXES                                                        (451,346)            (2,496,807)

OTHER INCOME (EXPENSES)
     Other Income                                                                         -                 25,000
     Liability Settlement                                                             4,240                 11,428
     Loss on Repossession of Oil and Gas Properties                                (789,787)            (1,900,000)
                                                                             --------------         --------------
                                                                                                                 -

           LOSS BEFORE INCOME TAXES
                 AND DISCONTINUED OPERATIONS                                     (1,236,893)            (4,360,379)

INCOME TAXES- Note 4                                                                      -                      -
                                                                             --------------         --------------

             NET LOSS                                                        $   (1,236,893)        $   (4,360,379)
                                                                             ==============         ==============

WEIGHTED AVERAGE NUMBER OF
     SHARES OUTSTANDING                                                          53,994,162             47,754,679
                                                                              =============            ===========

NET (LOSS) PER SHARE:                                                        $        (.02)         $        (.09)
                                                                              =============         =============
</TABLE>





                 The accompanying notes are an integral part of
                    these consolidated financial statements.
                                       F-5

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                  STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                             AND COMPREHENSIVE LOSS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>

                                            Common Stock       Additional                Unrealized
                                     ---------------------
                                     Number of                  Paid-In        Treasury  Loss on       Retained
                                      Shares        Amount      Capital        Shares    Securities    (Deficit)      Total


<S>                                 <C>           <C>          <C>           <C>         <C>          <C>            <C>
BALANCE, SEPTEMBER 30, 2002         43,518,036    $  87,036    $46,046,307   $ (267,981) $(4,920,000) $(36,457,577)  $  4,487,785


Sale of Shares                       3,553,366        7,107        168,908            -            -             -        176,015
Shares Acquired in Disposal of
Oil & Gas Property - Note 11        (2,000,000)      (4,000)       (96,000)           -            -             -       (100,000)

Sale of 9,357,968 Treasury Shares            -            -         87,621      267,981            -             -        355,602

Issuance of Option Shares -Note 3    5,700,000       11,400        (11,400)           -            -             -              -


COMPREHENSIVE LOSS, Net of Tax
   Net Loss                                  -            -              -            -            -    (4,360,379)    (4,360,379)

   Unrealized Loss on Securities
     Available-for-Sale                      -            -              -            -     (100,000)            -       (100,000)
                                                                                                                        ----------

   Total Comprehensive Loss                  -            -              -            -            -             -     (4,460,379)
                                   -----------      -------     ----------    ---------    ---------    ----------     ----------


BALANCE, SEPTEMBER 30, 2003         50,771,402      101,543     46,195,436            -   (5,020,000)  (40,817,956)       459,023


   Issuance of Shares as
      Settlement of Debt            41,895,815       83,791        544,646            -            -             -        628,437


COMPREHENSIVE LOSS, Net of Tax
   Net Loss                                  -            -              -            -            -    (1,236,893)    (1,236,893)
                                   -----------      -------      ---------     --------    ---------   -----------     ----------


BALANCE, SEPTEMBER 30, 2004         92,667,217    $ 185,334    $46,740,082   $        -  $(5,020,000) $(42,054,849)  $   (149,433)
                                   ===========    =========     ==========    =========   ========== ==============   ===========
</TABLE>



















                 The accompanying notes are an integral part of
                    these consolidated financial statements.
                                       F-6

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                             STATEMENT OF CASH FLOWS

                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>


                                                                                  2004                   2003
                                                                              --------------         -------------
CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                           <C>                    <C>
     Net (Loss)                                                               $  (1,236,893)         $  (4,360,379)
     Adjustments to Reconcile Net (Loss) to Net Cash
         From Operating Activities
             Depreciation, Depletion and Amortization                                16,243                 20,584
             Prepaid Consulting                                                      93,750              2,128,044
             Loss on Disposal of Assets                                             789,787              1,900,000
     Changes in Operating Assets and Liabilities
             Accounts Payable - Related Parties                                     138,118                 (8,459)
             Accounts Payable and Accrued Expenses                                  155,614                 (9,198)
             Other Assets                                                             3,425                  2,612
                                                                              -------------          -------------


                  NET CASH (USED) BY
                     OPERATING ACTIVITIES                                           (39,956)              (326,796)
                                                                              --------------         -------------

CASH FLOW FROM INVESTING ACTIVITIES
             Purchase of Equipment                                                        -                 (5,649)
                                                                              -------------          -------------

                  NET CASH (USED) BY
                     INVESTING ACTIVITIES                                                 -                 (5,649)
                                                                              -------------          -------------

CASH FLOW FROM FINANCING ACTIVITIES
             Loan Proceeds - Related Party                                           70,000                 48,500
             Repayments of Borrowings -Related Parties                              (43,767)              (243,353)
             Proceeds From Sale of Common Stock                                           -                176,015
             Proceeds from Sale of Treasury Shares                                        -                355,602
                                                                              -------------          -------------
                  NET CASH PROVIDED BY
                     FINANCING ACTIVITIES                                            26,233                336,764
                                                                              -------------          -------------

NET (DECREASE) INCREASE IN CASH                                                     (13,723)                 4,319

CASH AT BEGINNING OF PERIOD                                                          15,396                 11,077
                                                                              -------------          -------------

CASH AT END OF YEAR                                                           $       1,673          $      15,396
                                                                              =============          =============
</TABLE>






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

                                   (Continued)
                                       F-7

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY


                            STATEMENTS OF CASH FLOWS
                                   (Continued)

                 FOR THE YEARS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>

                                                                                 2004                     2003
                                                                              -------------          -------------

SUPPLEMENTAL SCHEDULE OF CASH FLOW
     INFORMATION
             Cash Paid During the Period For:
<S>                                                                           <C>                    <C>
                Interest                                                      $       5,500          $       8,665
                                                                              =============          =============
                Income Taxes                                                  $           -          $           -
                                                                              =============          =============

SUPPLEMENTAL SCHEDULE OF NONCASH
     INVESTING AND FINANCING ACTIVITIES:
             Investment in Securities Available-For-Sale                      $           -          $     100,000
             Unrealized Loss on Securities Available-For-Sale                             -               (100,000)
             Issuance of Common Stock as Settlement of Debt
                and Repossession of Oil and Gas Properties                          628,437                      -
             Transfer of Assets and Liabilities to Related Party
                as Settlement of Debt and Repossession of Oil
                and Gas Properties                                                 (628,437)                     -
             Disposal of Oil and Gas Property                                             -                100,000
             Shares Acquired in Disposal of Oil and
                Gas Property                                                              -               (100,000)
             Reduce Par Value of Common Stock                                             -               (783,324)
             Increase Paid -in - Capital for Change in
                Par Value of Common Stock                                                 -                783,324
                                                                              -------------          -------------

                                                                              $           -          $           -
                                                                              =============          =============
</TABLE>



















                 The accompanying notes are an integral part of
                    these consolidated financial statements.
                                       F-8

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Historically, the Company has engaged primarily in the acquisition, development
and exploration for and sale of oil and gas in the state of Texas. However,
during the year ended September 30, 2004, it became apparent that the Company
had to change its direction and focus due to its inability to meet its
obligations. Prompted by a nonpayment clause in the joint operating agreement
with Texas M.O.R., Inc. d/b/a/ Rife Oil Properties ("TXM"), the operator of the
wells, the Company transferred all of its oil and gas interests to TXM in
payment of those operating expenses. TXM is owned and controlled by Company
directors. Assets transferred and liabilities released are as follows:

              Oil and Gas Properties                        $     1,000,000
                  Less Accumulated Depletion                        (86,580)
              Operating Expenses Settled                           (123,633)
                                                            ---------------

                                                            $       789,787
                                                            ===============

As part of the settlement, the Company reached an agreement with its debt
holders, both related and nonrelated, whereby they would agree to convert their
debt to shares of the Company's stock. The following represents the Company's
assets transferred to and liabilities assumed by MOROIL, Inc. ("MOROIL"), a
company owned by a Company director and the Company's major stockholder, in
exchange for 16,650,229 shares of the Company's common stock valued at $.015,
the quoted market price on September 9, 2004:

              Furniture and Fixtures - Net                  $         5,375
              Other Assets                                            3,425
              Accounts Payable
                   Matrix Drilling                                   (6,325)
                   MOROIL                                           (56,000)
              Franchise Tax Payable                                 (35,833)
              Notes Payable
                   MOROIL                                          (107,215)
                   Peric Consulting, LLC                            (53,180)
                                                            ---------------

                                                            $       249,753

                       Share Price                          /        $ .015
                                                            ---------------

              Shares Issued                                      16,650,229
                                                            ===============

On September 9, 2004, the Company also issued its common stock in payment of a
note payable to Business Exchange, Inc. at the quoted market price of $.015 per
share as follows:

              Note Payable                                  $       250,000
              Accrued Interest                                      128,684
                                                            ---------------

                                                            $       378,684

                       Share Price                          /        $ .015
                                                            ---------------

              Shares Issued                                      25,245,586
                                                            ================

                                   (Continued)
                                       F-9

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Currently, the Company's purpose is to engage in any lawful corporate activity,
including possible merger and acquisition opportunities. Since September 9,
2004, the Company has had no operations other than the occurrence of certain
general and administrative expenses.

The Company is attempting to locate another business for the purpose of merging
that company (the "Target Company") into the Company. It is possible that the
Target Company will become a wholly owned subsidiary of the Company, or it may
sell or transfer assets into the Company and not merge. The Company can offer no
assurance that it will be successful in locating and merging with, or acquiring
another entity.

Basis of Consolidation

The consolidated financial statements include the accounts of Matrix Energy
Services Corporation and its 100% owned subsidiary, Spartan Resources Partners,
G.P. ("Spartan"). Accordingly, all references herein to the "Company" include
the consolidated results of its subsidiary. All significant inter-company
accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

Oil and Gas Properties

Prior to the repossession of its oil and gas properties on September 9, 2004,
the Company followed the full cost method of accounting for oil and gas
properties. Accordingly, all costs associated with acquisition, exploration, and
development of oil and gas reserves, including directly related overhead costs,
were capitalized.

All capitalized costs of oil and gas properties, including the estimated future
costs to develop proved reserves, were amortized on the units-of-production
method using estimates of proved reserves. Investments in unproved properties
and major development projects were not amortized until proved reserves
associated with the projects can be determined or until impairment occurred. If
the results of an assessment indicate that the properties were impaired, the
amount of the impairment was added to the capitalized costs to be amortized.

In addition, the capitalized costs were subject to a "ceiling test", which
basically limited such costs to the aggregate of the "estimated present value,"
discounted at 10-percent interest rate of future net revenues from proved
reserves, based on current economic and operating conditions, plus the lower of
cost or fair market value of unproved properties.

Sales of proved and unproved properties were accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss was recognized in
income. Abandonment of properties were accounted for as adjustments of
capitalized costs with no loss recognized.


                                   (Continued)
                                      F-10


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenues from the sale of oil and gas production were recognized when title
passed, net of royalties.

Use of Estimates

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

Depreciation and Amortization

For the year ended September 30, 2003 and from October 1, 2003 to September 9,
2004, office equipment was stated at cost and depreciated using the
straight-line method over their estimated useful lives of five (5) years. On
September 9, 2004, office equipment and accumulated depreciation were
transferred to MOROIL, a related company owned by a Company director in partial
reduction of MOROIL debt:

                                                2004               2003
                                             ----------         ---------
         Office Equipment Costs               $ 10,676          $ 10,676
         Accumulated Depreciation               (5,301)           (3,540)
                                              --------          --------

         Net Office Equipment                    5,375             7,136
         Transferred to MOROIL                  (5,375)                -
                                              --------          --------

                                              $      -          $  7,136
                                              ========          ========

The costs of maintenance and repairs are charged to expense when incurred; costs
of renewals and betterments are capitalized. Upon the sales or retirement of
property and equipment, the cost and related accumulated depreciation are
eliminated from the respective accounts and the resulting gain or loss is
included in operations.

Fair Value of Financial Instruments

At September 30, 2003, the Company's financial instruments consisted of cash,
accounts receivable, accounts payable and short-term debt. At September 30,
2004, the Company's financial instruments were cash and accounts payable. The
carrying amounts of cash, accounts receivable, accounts payable and short-term
debt approximated their fair value due to the relatively short maturity of these
instruments.

Long - Lived Assets

Long - lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount may
not be recoverable. When required, impairment losses on assets to be held and
used are recognized based on the fair value of the assets, and long - lived
assets to be disposed of are reported at the lower of carrying amount or fair
value less cost to sell. No impairment adjustments were required for the years
ended September 30, 2004 or 2003.

                                   (Continued)
                                      F-11


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial Statement Presentation

Certain amounts in the 2003 consolidated financial statements have been
reclassified to conform to the 2004 presentation.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount of
taxable income and pretax financial income and between the tax bases of assets
and liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as prescribed in
FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.

Concentration of Credit Risk

The Company places its cash in what it believes to be credit-worthy financial
institutions. However, cash balances may exceed FDIC insured levels at various
times during the year.

Stock-Based Compensation

In October 1999, the Company adopted its 1999 Stock Benefit Plan ("Plan") under
which officers, employees, and individuals who management perceives to have
contributed to the success of the Company may be granted shares of common stock
or options to purchase common stock at a price determined by the administrators
of the Plan. The maximum number of shares of the Company's common stock
available for issuance under the Plan was 4,000,000. As of September 30, 2004,
the number of shares available for future grants under the Plan was 1,780,000.
The Company accounts for the issuance of these stocks and options pursuant to
the guidance set forth in Financial Accounting Standards Board Statement No. 123
(Accounting for Stock-Based Compensation) using the fair value method. There
were no shares issued from this Plan for the years ending September 30, 2004 and
2003. As of September 30, 2004, there were no stock options outstanding under
this Plan.

In June 2002, the Company adopted its 2002 Stock Benefit Plan ("2002 Plan")
under which officers, employees, and individuals who management perceives to
have contributed to the success of the Company may be granted shares of common
stock or options to purchase common stock at a price determined by the
administrators of the 2002 Plan. The maximum number of shares of the Company's
common stock available for issuance under the Plan was 3,000,000. As of
September 30, 2004, the number of shares available for future grants under the
Plan was 254,050. The Company accounts for the issuance of these stocks and
options pursuant to the guidelines set forth in Financial Accounting Standards
Board Statement No. 123 (Accounting for Stock-Based Compensation) using the fair
value method. There were no shares issued from this Plan for the years ending
September 30, 2004 and 2003. As of September 30, 2004, there were no stock
options outstanding under this Plan.
                                   (Continued)
                                      F-12


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Options

During the year ended September 30, 2002, the Company authorized the granting of
options covering a total of 5,700,000 shares of the Company's common stock to
certain consultants of the Company. These options were valued on their grant
date using the Black-Scholes option-pricing model of $.28683 per share or
$1,634,950. These options were exercised in 2003. There were no outstanding
stock options at September 30, 2004.

       A summary of the Company's outstanding stock option transactions is as
follows:
<TABLE>
<CAPTION>

                                                                                 Years Ended September 30,
                                                                  --------------------------------------------------------
                                                                           2004                          2003
                                                                  ---------------------------   --------------------------
                                                                                   Weighted                     Weighted
                                                                                   Average                      Average
                                                                                   Exercise                     Exercise
                                                                      Shares         Price        Shares           Price
                                                                    ----------     -----------  -----------    ---------
<S>                                                                 <C>            <C>          <C>            <C>
     Outstanding at Beginning of Year                                        -     $       -     5,700,000     $        -
       Granted                                                               -             -             -              -
       Exercised                                                             -                  (5,700,000)             -
       Forfeited                                                             -             -             -              -
                                                                    ----------      --------    ----------     ----------

     Outstanding at End of Year                                              -     $       -             -     $        -
                                                                    ==========      ========    ==========     ==========
</TABLE>



The fair value of each grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighed average
assumptions used for grants: dividend yield of zero percent (0%); expected
volatility of two hundred and forty four percent (244%); risk free interest
rates of five percent (5.0%) and expected lives nine months.

Comprehensive Income

In June 1997, SFAS No. 130, "Reporting Comprehensive Income", was issued. This
statement establishes standards for the reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in the
financial statements. Statement No. 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. It does not require a
specific format for that financial statement but requires that an entity display
an amount representing total comprehensive income for the period in that
financial statement. Statement No. 130 had no impact on the financial condition
or results of operations of the Company, but required changes in the Company's
disclosure and presentation requirements. The principal change was the
disclosure of the components of and total comprehensive income within the
Consolidated Statements of Stockholders' equity.


                                   (Continued)
                                      F-13

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Net (Loss) Per Share of Common Stock

Per share amounts have been computed based on the weighted average number of
common shares outstanding during the period. Potential common stock has been
excluded from the computation of earnings per share since the inclusion of
options and warrants would be anti-dilutive.

NOTE 2:  NOTES PAYABLE

Notes payable at September 30, 2004 and 2003 consist of the following:
<TABLE>
<CAPTION>

                                                                                  2004                   2003
                                                                               -----------            -----------

<S>                                                                            <C>                    <C>
     a) Note Payable - Business Exchange Investments, Inc.                     $        -             $   250,000
                                                                               ----------             -----------

     b) Note Payable - Related Party                                                    -                  33,445
     c) Note Payable - Related Party                                                    -                  48,500
                                                                               ----------             -----------

                                                                                        -                  81,945

                                                                               $        -             $   331,945
                                                                               ==========             ===========
</TABLE>


     a)   The Company was indebted to Business Exchange Investment, Inc. under
          terms of a promissory note dated September 15, 1998. Terms of the note
          provide for interest at a rate of 10% per annum with an extended
          maturity date of September 15, 2004. The note is collateralized by
          100% of the shares of Power Operating, Inc., an inactive subsidiary
          owned by the Company. On September 9, 2004, the $250,000 note, plus
          accrued interest of $128,684 was exchanged for 25,245,586 shares of
          the Company's common stock at $.015 per share, the quoted market price
          of the stock on the day the issuance of stock was authorized.

     b)   The Company was indebted to MOROIL, Inc. under the terms of a 5%
          promissory note dated July 16, 2002, with an extended maturity date of
          September 1, 2004. From October 1, 2003 to September 9, 2004, MOROIL
          advanced additional operating loans and accrued additional interest
          aggregating $216,308. On September 9, 2004, this total debt of
          $249,753 was converted to 16,650,229 shares of the Company's common
          stock at $.015 per share, the quoted market price of the stock on the
          day the issuance of stock was authorized.

     c)   The Company was indebted to Peric Consulting, LLC, a company managed
          by the Company's Chief Financial Officer, under the terms of a 6%
          promissory note dated March 15, 2003, in the amount of $48,500. The
          note plus accrued interest aggregating $53,180 was assumed by MOROIL
          on September 9, 2004.

                                   (Continued)
                                      F-14


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 3:  CORRECTION OF AN ERROR

Outstanding shares of common stock were understated at September 30, 2003 by
5,700,000 shares. The adjustment to correct this error follows:
<TABLE>
<CAPTION>

                                                                                                   Additional
                                                   Number of                 Par Value              Paid - In
                                                     Shares                   Amount                 Capital
                                                   ------------              -----------         ---------------
              As Previously Stated,
<S>                                                  <C>                     <C>                 <C>
                September 30, 2003                   45,071,402              $    90,143         $   46,206,836

              Issuance of Option
               Shares                                 5,700,000                   11,400                (11,400)
                                                     ----------               ----------         --------------

              As Restated                            50,771,402              $   101,543         $   46,195,436
                                                     ==========               ==========         ==============
</TABLE>



<TABLE>
<CAPTION>

                                                          Weighted Average
                                                          Number of Shares                       Net Loss
                                                             Outstanding                         Per Share

<S>                                                                 <C>                          <C>
              As Previously Stated,                                 46,000,833                   $      .09
                                                          ====================                   ==========
                September 30, 2003

              As Restated                                           47,360,379                   $      .09
                                                          ====================                   ==========
</TABLE>





















                                   (Continued)
                                      F-15

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003

NOTE 4:  INCOME TAXES

The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>

                                                                                            September 30,
                                                                                 ------------------------
                                                                                    2004                   2003
                                                                                 ----------             -------
     Current Tax Expense
<S>                                                                              <C>                    <C>
         U.S. Federal                                                            $       -              $       -
         State and Local                                                                 -                      -
                                                                                 ---------              ---------

             Total Current                                                       $       -              $       -
                                                                                 ---------              ---------

     Deferred Tax Expense
         U.S. Federal                                                            $       -              $       -
         State and Local                                                                 -                      -
                                                                                 ---------              ---------

             Total Deferred                                                      $       -              $       -
                                                                                 ---------              ---------

             Total Tax Provision from
                Continuing Operations                                            $       -              $       -
                                                                                 =========              =========
</TABLE>


The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:
<TABLE>
<CAPTION>

                                                                                    2004                   2003
                                                                                 ----------             -------

<S>                                                                                 <C>                  <C>
     Federal Income Tax Rate                                                        (34.0)%              (34.0)%
     Deferred Tax Charge (Credit)                                                       -                    -
     Effect of Valuation Allowance                                                   34.0 %               34.0 %
     State Income Tax, Net of Federal Benefit                                           -                    -
                                                                                    -------              -------

     Effective Income Tax Rate                                                        0.0 %                0.0 %
                                                                                    =======              =======
</TABLE>















                                      F-16

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003

NOTE 4:  INCOME TAXES (CONTINUED)

At September 30, 2004, the Company had net carry-forward losses of approximately
$32,958,000. A valuation allowance equal to the tax benefit for deferred taxes
has been established due to the uncertainty of realizing the benefit of the tax
carry-forward.

Deferred tax assets and liabilities reflect the net tax effect of temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and amounts used for income tax purposes. Significant
components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>

                                                                                          September 30,
                                                                              -----------------------------------
                                                                                 2004                   2003
                                                                              -------------          ------------
     Deferred Tax Assets (Liabilities):
<S>                                                                           <C>                    <C>
         Loss Carry-forwards                                                  $  11,206,000          $  10,791,000
         Exploration Costs                                                                -                (23,000)
         Depreciation                                                                     -                (29,000)
         Impairment Loss                                                                  -              2,671,000
                                                                               ------------           -------------

                Net Tax Assets                                                   11,206,000             13,410,000
             Less: Valuation Allowance                                          (11,206,000)           (13,410,000)
                                                                               ------------           ------------

                Net Deferred Tax Assets                                       $           -          $           -
                                                                               ============           ============
</TABLE>


Net tax operating loss carry-forwards expire in 2005 through 2019 as follows:


                         September 30,
                             2005                       $      5,000
                             2007                             65,000
                             2009                             16,000
                             2010                              3,000
                             2011                             28,000
                             2012                            303,000
                             2013                          2,329,000
                             2014                          3,901,000
                             2015                         17,612,000
                             2016                            772,000
                             2017                          2,330,000
                             2018                          4,357,000
                             2019                          1,237,000
                                                          ------------

                                                        $ 32,958,000





                                      F-17

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 5:  RELATED PARTY TRANSACTIONS

During the year ended September 30, 2004:

     a)   On September 9, 2004, TXM, a company owned by a Director and the
          operator of the oil and gas wells, took possession of the Company's
          oil and gas leases in Corsicana, Texas for non-payment of lease
          operating expenses.

     b)   On September 9, 2004, the Company issued 16,560,229 shares of its
          common stock to MOROIL, Inc., a company owned by a director, in
          settlement of various notes and accounts payable aggregating $249,753.
          Interest expense on the note was $1,537.

     c)   TXM was the operator of all oil and gas leases owned by the Company.
          Prior to TXM'S repossession of the leases on September 9, 2004, TXM
          charged the Company $241,019 for operating the Company's oil and gas
          wells.

     d)   The Company leases its office space from M.O. Rife, III Trust A, a
          trust owned by a Director. Rental expense for the year ended September
          30, 2004 was $4,400.

     e)   On September 9, 2004, the note payable to Peric Consulting, a company
          managed by the Company's CFO, in the amount of $48,500 plus accrued
          interest of $4,680 (totaling $53,180) was assumed by MOROIL, the
          Company's major stockholder owned by a Company director, as part of
          the repossession of the Company's oil and gas properties.

During the year ended September 30, 2003:

     a)   TXM, a company owned by a Director is the operator of all oil and gas
          leases owned by the Company. For the year ended September 30, 2003,
          TXM charged the Company $228,448 for operating the Company's oil and
          gas wells.

     b)   The Company renewed its note payable to MOROIL, Inc., a company owned
          by a Director. The original loan in the amount of $286,366 was used to
          purchase 10,000,000 treasury shares. At September 30, 2003 the balance
          of the note was $33,445 including accrued interest of $779. Interest
          expense on this note was $4,947 for the year ended September 30, 2003.

     c)   A limited liability company managed by the Company's Chief Financial
          Officer loaned Spartan $48,500 at 6% interest due March 15, 2004.
          Interest expense on this note was $4,165 for the year ended September
          30, 2003.

     d)   The Company leases its office space from M.O. Rife, III Trust A, a
          trust owned by a Director. Rental expense for the year ended September
          30, 2003 was $36,000.

     f)   The following amounts were due to various related parties at September
          30, 2003:

                                                                   Net
                                                                 Accounts
                                                                 Payable

                Texas M.O. R., Inc.                              $    20,307
                M.O. Rife, III Trust A                                24,000
                MOROIL, Inc.                                          46,000
                Matrix Drilling                                        6,325
                                                                  -----------

                                                                 $    96,632
                                                                  ==========
                                      F-18


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003



NOTE 6:  CONSULTING AGREEMENTS

During the year ended September 30, 2002, the Company issued 13,550,000 shares
of its common stock valued at $1,623,500 and 5,700,000 options to purchase the
Company's common stock valued at $1,634,950 in payment of various consulting
services. The shares of common stock were valued at the quoted market price on
the day the issuance of stock was authorized. The options were valued using the
Black-Scholes option-pricing model on the grant date. Included in the $3,258,450
of consulting fees was $2,221,794 recorded as prepaid consulting fees for future
services through March 1, 2004. The balance of those prepaid consulting fees
were amortized and charged to expense during the years ended September 30, 2004
and 2003, in the amounts of $93,750 and $2,128,044, respectively.

NOTE 7:  COMMITMENTS AND CONTINGENCIES

For the years ended September 30, 2004 and 2003, the Company expensed $150 and
$15,964 in equipment rental fees, respectively. As of September 30, 2004, the
Company had no future commitments on non-cancelable operating leases.

The Company carries no general liability insurance.

On May 2, 2003, a judgment was issued against the Company for nonpayment of
services in the amount of $128,000 plus interest at 10% and court costs. The
Company was made aware of their judgment in late October 2004, and a liability
has been recorded in accrued liabilities in the amount of $151,106 with the
corresponding amount charged to general and administrative expenses.


NOTE 8:  SUPPLEMENTAL DISCLOSURE OF COMMON STOCK ACTIVITIES

During the year ended September 30, 2004, the Company issued the following
shares of its common stock:
<TABLE>
<CAPTION>

                                                                                    Number of
                            Reason For Issuance                                      Shares                    Value
                ---------------------------------                                --------------            --------------
<S>                                                                                  <C>                   <C>
                Settlement of Related Party Debt                                     16,650,229            $      249,753
                Settlement of Non-related Party Debt                                 25,245,586                   378,684
                                                                                     ----------            --------------

                                                                                     41,895,815            $      628,437
                                                                                     ==========            ==============
</TABLE>


The fair value of the shares issued was determined by using the reported trading
value on the date of issue.

During the year ended September 30, 2003, the Company's common stock
transactions included:
<TABLE>
<CAPTION>

                                                                                   Number of
                            Reason For Issuance                                      Shares                  Fair Value

<S>                                                                                 <C>                     <C>
                Sale of Common Stock                                                 3,553,366              $    176,015
                Sale of Treasury Shares                                              9,357,968                    87,622
                Shares Acquired in Disposal of an
                   Oil & Gas Property                                               (2,000,000)                 (100,000)
                Option Shares Issued                                                 5,700,000                         -
                                                                                    ----------              ------------

                                                                                    16,611,334              $   (163,637)
                                                                                    ==========              ============
</TABLE>

                                      F-19

<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 9:  GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming
the company will continue as a going concern. As of September 30, 2004, the
Company has a working capital deficit, of $152,190 and an accumulated deficit of
$42,057,606. Based upon the Company's plan of operation, the Company estimates
that existing resources will not be sufficient to fund the Company's working
capital deficit. The Company is actively seeking additional equity financing.
There can be no assurances that sufficient financing will be available on terms
acceptable to the Company or at all. If the Company is unable to obtain such
financing, the Company will be forced to further scale back operations, which
would have an adverse effect on the Company's financial condition and results of
operation.


NOTE 10: INVESTMENT IN MARKETABLE SECURITIES

At September 30, 2004, marketable securities were comprised of 2,000,000 shares
of U.S. Home Properties, Inc.'s (formerly Career Worth, Inc.) equity securities
classified as available-for-sale. Marketable securities considered
available-for-sale are recorded in the financial statements at fair market
value, in accordance with SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities. The corresponding unrealized gain or loss in the
fair market value in relation to cost is accounted for as a separate item in the
stockholders' equity section of the balance sheet.

Following are the market value, original cost, and unrealized loss on marketable
securities available for sale as of September 30, 2004.


                                   Market                        Unrealized
                                   Value            Cost           (Loss)
                                -------------    -----------      ---------

U.S. Home Properties, Inc.
(formerly Career Worth, Inc.)   $           -    $ 5,020,000     $(5,020,000)
                                =============    ===========     ===========















                                      F-20


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003


NOTE 11:  SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)

The following supplemental unaudited information regarding the Company's oil and
gas activities is presented pursuant to the disclosure requirements of Statement
of Financial Accounting Standards No. 69. The proved oil and gas properties have
been reduced to their estimated realizable value of the leases if a sale was
made to an unrelated third party in an arms length transaction; therefore, no
reserve information is being reported.
<TABLE>
<CAPTION>
                                                                                        September 30,
                                                                               -----------------------------------
                                                                                  2004                   2003
                                                                               ------------           ------------
     Capitalized Costs Relating to Oil and Gas
       Producing Activities at September 30:
<S>                                                                            <C>                    <C>
         Proved Oil and Gas Properties                                         $          -           $  1,000,000
         Unproved Oil and Gas Properties                                                  -                      -
         Less: Accumulated Amortization and Impairment                                    -                (72,098)
                                                                               ------------           ------------

             Net Capitalized Costs                                             $          -           $    927,902
                                                                               ============           ============

     Costs Incurred in Oil and Gas Producing Activities for
       the Year Ended September 30,
         Property Acquisition Costs:
             Proved                                                            $          -           $          -
                                                                               ------------           ------------

     Results of Operations for Oil and Gas Producing
Activities for the Years Ended September 30,
         Oil and Gas Sales                                                     $    157,833           $    152,752
         Production (Lifting) Costs and Production Taxes                           (248,319)              (235,520)
         Amortization Expenses                                                      (14,483)               (18,313)
                                                                               ------------           ------------

                  Net Loss                                                         (104,969)              (101,081)

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

     Results of Operations for Oil and Gas Producing
       Activities (excluding corporate overhead and
       financing costs)                                                        $   (104,969)          $   (101,081)
                                                                               ============           ============
</TABLE>


Due to the Company's failure to develop the BLM lease acreage acquired in 2002,
J. Rags Properties, LLC, ("Rags") the previous owner of the lease acreage,
requested that the Company return the lease acreage to Rags' ownership in
exchange for cancellation of the 2,000,000 shares of the Company's stock issued
in 2002. The difference in the fair value of the 2,000,000 shares of common
stock at the acquisition and disposal dates was $1,900,000 and this amount has
been recognized as a loss on disposal of assets at September 30, 2003. The
Company could not develop the lease acreage because of its inability to secure
adequate financing, due in part to problems encountered in securing a natural
gas pipeline connection.


                                   (Continued)
                                      F-21


<PAGE>


                MATRIX ENERGY SERVICES CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 2004 AND 2003

NOTE 11:  SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)
(CONTINUED)

The depreciation, depletion and amortization recognized as expense was $14,483
and $18,313 for the years ended September 30, 2004 and 2003, respectively.

As of September 9, 2004, the Company transferred ownership of its oil and gas
leases pursuant to a nonpayment clause in the joint operating agreement with the
operator of the wells, TXM, a company owned by the Company's Chairman of the
Board. Therefore, as of September 30, 2004, the Company was no longer conducting
business in the oil and gas industry.


































                                      F-22


<PAGE>





                       CONSENT OF INDEPENDENT ACCOUNTANTS




We hereby consent to the incorporation of our report dated November 22, 2004,
which is incorporated in this Annual Report on Form 10-K.



/s/ Killman, Murrell & Co., P.C.
Killman, Murrell & Co., P.C.

December 23, 2004

































<PAGE>



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

For the fiscal year ended September 30, 2004, the Company has no changes or
disagreements on the accounting and financial disclosures made by Killman,
Murrell & Co., P.C.






















































                                       37

<PAGE>




                                    PART III

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

The Issuer has a 3-person board of directors, all of which positions are
currently filled. The Directors and Executive Officers of the Issuer, their ages
and present positions held with the Issuer are:



NAME                               AGE    POSITION HELD

M. O. Trey Rife III                64     Chairman of the Board & Director
Joe Bill Bennett                   57     Chief Executive Officer & Director
Mark S. Zouvas                     42     Chief Financial Officer & Director



The Issuer's Directors were elected October 5, 1999 and will serve in such
capacity until the next annual meeting of the Issuer's shareholders or until
their successors have been elected and qualified. There are no familial
relationships among the Issuer's officers and directors, nor are there any
arrangements or understandings between any of the officers or directors of the
Issuer or any other person pursuant to which any officer or director was or is
to be selected as an officer or director.

M.O. Rife III, Chairman/Director. Mr. Rife was born in Fort Worth, Texas in
1939. He is 63 years old. He was elected to the Company's Board of Directors in
May of 1997. Mr. Rife will serve as a Director until the next regularly held
shareholder's meeting, or until his successor is elected and qualified. He
currently serves as the Chairman of the Board. His family has been in the oil
industry for three generations. His grandfather retired from Gulf Oil as a
production superintendent and his father was an independent oil and gas operator
for over forty years. Mr. Rife attended Texas Christian University and began
working in the oil field when he was eighteen. He worked with his father for 15
years, then started his own company, Rife Oil Properties. For the past
twenty-five years, he has served as President and Chief Executive Officer of
Rife Oil Properties. He has been involved in the drilling, completion and
operating of over 500 wells throughout the mid-continent Region.

Joe Bennett, Director, Chief Executive Officer. Mr. Bennett was born in Graham,
Texas in 1946. He is 56 years old. He was elected to the Company's Board of
Directors in May of 1997. Mr. Bennett will serve as a Director until the next
regularly scheduled shareholder's meeting, or until his successor is elected and
qualified. He currently serves as Chief Executive Officer of the Company after
stepping down as CEO for a short period from March 1, 2002 to September 20,
2002. He has worked for the Company since September of 1994. Prior to being
appointed Chief Executive Officer in September 1999, he served as a
Vice-President of the Company. His family has been involved in the oil industry
as independent oil and gas operators in North Texas for three generations. Mr.
Bennett attended the University of Texas at Austin studying petroleum
engineering. At the age of sixteen he began working summers in the oil field for
the family business. He has over 30 years of experience in developing
exploration projects, drilling and completing wells, and all phases of
operations. From 1976 to 1980 Mr. Bennett helped organize and start up an
aircraft overhaul business that employed over 100 people. As C.O.O., he was
responsible for all operations and marketing. In 1981 Mr. Bennett became
President and CEO of Bennett Resources, Inc. As head of the family business, he
directed the development of exploration projects in Texas, Oklahoma, Kansas,
Illinois, Kentucky and Tennessee. In 1994 Mr. Bennett joined Rife Oil Properties
as VP Operations. His primary responsibilities were to oversee the company's
stripper well acquisition program and to manage all operations of these
properties using new production technology.

Mark S. Zouvas, Chief Financial Officer, Director. Mr. Zouvas was re-elected to
the Company's Board of Directors on May 29, 2003. He currently serves as Chief
Financial Officer of the Company. Mr. Zouvas has previously held these positions
with the Company, and in order to facilitate further financing efforts, the
Board feels it requires his services. He will serve as a Director until the next
regularly scheduled shareholder's meeting, or until his successor is elected and
qualified. Mr. Zouvas has a BA from the University of California at Berkeley. As
a staff auditor with Price Waterhouse, he performed services for clients in the
banking and real estate industries. Mr. Zouvas has been involved in various
venture capital transactions over the past fifteen years. Mr. Zouvas' primary
responsibilities include fund raising, investor relations and corporate
compliance. He brings an increased experience level to the corporate finance
capability of the Company. His financial, accounting and banking experience are
well founded and are a necessity in today's ever-changing markets both
domestically and worldwide. Mr. Zouvas has had over fifteen years of experience
in creating investment summaries and has raised over $50 million through debt
and equity offerings.


                                       38


<PAGE>




Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the
Company is not aware of any person who at any time during the fiscal year ended
September 30, 2003 was a director, officer, or beneficial owner of more than ten
percent of the Common Stock of the Company, and who failed to file, on a timely
basis, reports required by Section 16(a) of the Securities Exchange Act of 1934
during such fiscal year.

ITEM 10. EXECUTIVE COMPENSATION

Joe Bill Bennett has served as Chief Executive Officer since 1999. He received
no compensation during the fiscal year ended September 30, 2004. In the fiscal
year ended September 30, 2003, he received $52,200 in compensation, paid in the
form of salary, per diem and car allowance.

Mark S. Zouvas has served as Chief Financial Officer since his re-appointment in
May of 2003 and has received no compensation for his services during the period
ending September 30, 2003 or the fiscal year ended September 30, 2004.

Compensation of Directors

M. O. Rife III, Chairman of the Board/Director since 1999, was not compensated
for his services during the fiscal year ending September 30, 2004. For the year
ended September 30, 2003, he was paid $2,250 as compensation for his services on
the board of directors.

Joe Bill Bennett, CEO/Director since 1999, received no additional compensation
for his services as a director for the years ending September 30, 2004 and 2003.

Mark S. Zouvas, CFO/Director since his re-appointment in May of 2003, received
no compensation for his services as a director for the year ended September 30,
2004 and 2003.






























                                       39


<PAGE>




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the ownership of
the Company's Common Stock as of December 23, 2004, with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock; (ii) all directors; and (iii) directors and
executive officers of the Company as a group. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided below. As of December 23, 2004, there were 92,667,217 shares of
Common Stock issued and outstanding.

<TABLE>
<CAPTION>


                                                               Amount and Nature of
  Title of Class         Name and Address of Beneficial        Beneficial Ownership         Percent of class
  --------------         -------------------------------       --------------------         ----------------
                                      Owner
                                      -----

<S>                       <C>                                   <C>                         <C>
Common Stock              Joe Bill Bennett                           2,664                   0.003%
($0.002) par value        5416 Birchman
                          Fort Worth, TX 76107

Common Stock              M. O. Rife, III                            1,860                   0.002%
($0.002) par value        5601 El Campo
                          Fort Worth, Texas 76107

Common Stock              Mark S. Zouvas                               456                   0.000%
($0.002) par value        5416 Birchman Ave.
                          Fort Worth, TX 76107

Common Stock              Directors and Executive Officers           4,980                   0.005%
($0.002) par value        as a Group (3 individuals)

Common Stock              MOROIL, Inc.                          49,135,815                  53.0%
($0.002) par value        5416 Birchman Ave.
                          Fort Worth, TX 76107


Common Stock              Cede & Co.                            14,242,418                  15.4%
($.002) par value         PO Box 222
                          Bowling Green Station
                          New York, NY 10274
</TABLE>


























                                       40


<PAGE>




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended September 30, 2004:

On September 9, 2004, Texas M.O.R., Inc., d/b/a Rife Oil Properties (TXM), a
company owned by a Director and the operator of the oil and gas wells, took
possession of the Company's oil and gas leases in Corsicana, Texas for
non-payment of lease operating expenses.

On September 9, 2004, the Company issued 16,560,229 shares of its common stock
to MOROIL, Inc., a company owned by a Director, in settlement of various notes
and accounts payable aggregating $249,753. Interest expense on the note was
$1,537.

TXM was the operator of all oil and gas leases owned by the Company. Prior to
TXM's repossession of the leases on September 9, 2004, TXM charged the Company
$241,019 for operating the Company's oil and gas wells.

The Company leases its office space from M.O. Rife, III Trust A, a trust owned
by a Director. Rental expense for the year ended September 30, 2004 was $4,400.

On September 9, 2004, the note payable to Peric Consulting, a company managed by
the Company's CFO, in the amount of $48,500 plus accrued interest of $4,680
(totaling $53,180) was assumed by MOROIL, Inc., the Company's major stockholder,
owned by a Company Director, as part of the repossession of the Company's oil
and gas properties.


None of the other directors, executive officers or senior officers of the Issuer
or any subsidiary, or any associates or affiliates of any of them, is or has
been, indebted to the Issuer at any time since the beginning of the last
completed financial year of the Issuer.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits beginning on page 26 of this Form 10-KSB, which
is incorporated herein by reference.

(b) Reports on Form 8-K. The Company filed 1 report on Form 8-K during the
fourth quarter of the fiscal year ending September 30, 2004.



























                                       41

<PAGE>




                                   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, this 23rd day of December 2004.

                       Matrix Energy Services Corporation

               Joe Bennett, President and Chief Executive Officer

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.





Signature               Title                                  Date

/s/Joe Bill Bennett
---------------------
Joe Bill Bennett        Chief Executive Officer/Director       December 23, 2004


?s?Mark Zouvas
---------------------
Mark Zouvas             Chief Financial Officer/Director       December 23, 2004

































                                       42

<PAGE>





                                INDEX TO EXHIBITS

-------------- -------- -------------------------------------------------------
Exhibit No.    Page     Description
               No.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.1            *        Plan of Reorganization  and Change of Situs by which
                        Titan Energy Corp., and Power Exploration, Inc. Changes
                        Its Place of Incorporation
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.2            *        Agreement and Plan of Merger Between Power  Exploration,
                        Inc. (Nevada) and Power  Exploration, Inc. (Colorado)
                        . August 1, 1998
-------------- -------- -------------------------------------------------------
2.3            *        Articles of  Incorporator.  Election of  Officers  and
                        Directors  of Power  Exploration,  Inc. (Nevada)
                        . May 31, 1998
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
2.4            *        Action  by  Incorporator.  Election  of  Officers  and
                        Directors  of Power  Exploration,  Inc.(Nevada)
                        . May 1998
-------------- -------- -------------------------------------------------------
-------------------------------------------------------------------------------
2.5            *        Special  Action by the Executive  Committee of Power
                        Exploration,  Inc. dated January 11, 1999
                        (Incorporated herein by reference from Exhibits to the
                        Company's Form 8-K field January 19, 1999).
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.1            *        Articles of Incorporation of Imperial Energy dated
                        October 31, 1979.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.2            *        Amendment to Articles of Incorporation dated June 26,
                        1984.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.3            *        Amendment to Articles of Incorporation dated September
                        25, 1996.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.4            *        Minutes of Special Shareholders Meeting Changing Name
                        to Oil Retrieval Systems,  Inc. dated May 14, 1997
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.5            *        Amendment to Articles of  Incorporation  dated June 15,
                        1997,  Changing  Name to Oil  Retrieval Systems, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.6            *        By Laws of the Corporation
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.7            *        Articles of Incorporation of Power Exploration, Inc.
                        (Nevada) dated May 14, 1998
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
3.8            *        By Laws of Power Exploration, Inc. (Nevada dated June 1,
                        1998
-------------- -------- -------------------------------------------------------

<PAGE>

-------------- -------- -------------------------------------------------------
10.1           *        Acquisition  Agreement  dated  December 8, 1999 between
                        Power  Exploration,  Inc. and Rife Oil Properties,  Inc.
                        (Incorporated  herein by reference  from Exhibits to the
                        Company's  Form 8-K filed December 13, 1999).
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.2           *        Agreement to Extend Repayment  Obligation Between Power
                        Exploration,  Inc. and Trident III LLC dated May 1,
                        1999.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.3           *        Advisory  Agreement  entered into between  Power
                        Exploration,  Inc. and Ronald  Welborn  dated October
                        21, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
10.4           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Benchmark Equity Group,  Inc., Rife Oil
                        Properties,  Inc. and Jeffery W. Tomz.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.5           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Trident III, LLC.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.6           **       Compromise  Settlement  Agreement  and Mutual  Release
                        dated  December 20, 1999 between  Power Exploration,
                        Inc. and Benchmark Equity Group, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.7           **       Purchase  Agreement  dated  December 20, 1999 between
                        Power  Exploration,  Inc. and  Benchmark Equity Group,
                        Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.8           **       Purchase  Agreement  dated December 20, 1999 between
                        Power  Exploration,  Inc. and Trident III, LLC.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.9           *        Fee  Agreement for Legal  Services  between Power
                        Exploration,  Inc. and Richard  Surber dated
                        March 24, 2000.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.10          *        Contract for Financial Public Relations Services between
                        Power Exploration, Inc. and Interwest Associates dated
                        September 15, 2000.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.11          *        Advisory  Agreement  dated  September  21, 2000 between
                        Power  Exploration,  Inc and Howard A. Pence.

-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.12          *        Agreement  between Power  Exploration,  Inc. and Genesis
                        Capital Corp.  dated February 9, 2000, for the
                        acquisition of Lincoln Health Fund, Inc.
-------------- -------- -------------------------------------------------------

<PAGE>

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


10.13          *        Agreement for Sale of Property  owned by Lincoln Health
                        Fund, Inc.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.14          *        Advisory  Agreement  entered into between  Power
                        Exploration,  Inc. and Ronald  Welborn  dated
                        December 8, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
10.15          *        Advisory  Agreement  entered into between  Power
                        Exploration, Inc. and Allen Z. Wolfson dated
                        December 8, 1999.
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
10.16          *        Merger and Acquisition Agreement dated March 20, 2000
                        (Pepin Oil Company, Inc. Acquisition.
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
21.1           *        Subsidiaries of the Issuer
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
23             *        Consent of Auditor
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
27             *        Financial Data Schedule ACE
-------------- -------- -------------------------------------------------------
-------------- -------- -------------------------------------------------------
99.1           *        Oil Lease Information Per Industry Guide for Corsicana
                        Field Near Dallas, Texas
-------------- -------- -------------------------------------------------------
-------------- -------- --------------------------------------------------------
99.2           *        Oil Lease Information Per Industry Guide for Polk
                        County, Texas Leases
-------------- -------- -------------------------------------------------------



* Previously filed and incorporated herein by reference from the Form 10-KSB
field January 14, 2000 by the Company.

** Previously filed and incorporated herein by reference from the Form 10-QSB
field February 22, 2000 by the Company.
















                                       45