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**Securities and Exchange CommissionWashington, D.C. 20549**
**Form 10-QSB**
**                       [X]****    QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended August 31, 2000**

**                       [  ]    TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT**

**For the transition period from                                      to                                     **

**Commission file number 0-24819**
**AMERICAN ENERGY SERVICES, INC.****Texas****76-0279288****(State or other jurisdiction ofincorporation or organization)****(IRS Employer Identification No.)**
**7224 Lawndale, Houston, TX 77012(Address of principal executive offices)**

**713-928-5311(Issuer's telephone number)**

        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        

        As of October  10, 2000, there were 8,339,260 shares of Common Stock outstanding.

**PART I.   FINANCIAL INFORMATION**

**ITEM 1.   *****Financial Statements***

****AMERICAN ENERGY SERVICES, INC.BALANCE SHEETS(Unaudited)**

**ASSETS**
  **August 31,2000** **February 29,2000**Current Assets:         Cash and cash equivalents    $3,867      $75,778  Certificates of deposit     6,130       Accounts receivable — trade,      net of $19,924 and $0 reserves     232,345       662,132   Accounts receivable — other     65,077       41,176  Income tax receivable     124,000       124,000  Prepaids and other     17,369       17,370  Costs in excess of billings on uncompleted contracts     2,362,097       1,491,996  Inventories     1,901,855       1,901,855               Total Current Assets     4,712,740       4,314,307  Property, Plant and Equipment:         Machinery and equipment     1,360,122       1,307,682  Furniture and fixtures     331,490       327,541  Vehicles     83,423       83,423  Buildings and Improvements     226,510       226,970  Land     76,894       76,894                     2,078,438       2,022,510  Less: Accumulated depreciation     (947,180)      (881,181)                    1,131,258       1,141,329  Trademarks, patents, and drawings     1,395,462       1,275,462  Less: Accumulated amortization     (401,127)      (378,545)                    994,335       896,917  Deferred tax asset     150,110       150,110  Other assets     204,541       193,819               Total Assets    $7,192,984      $6,696,482               
 

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**AMERICAN ENERGY SERVICES, INC.  BALANCE SHEETS (Continued)  (Unaudited)**

**LIABILITIES AND STOCKHOLDERS' EQUITY**
  **August 31,2000** **February 29,2000**Current Liabilities:         Notes Payable    $2,911,393      $2,962,008  Current portion of long-term obligations     1,371,319       1,382,347  Current portion of capital leases     100,060       120,175  Accounts payable and accrued expenses     1,481,111       1,849,414  Billings in excess of costs on uncompleted contracts     46,925       46,991  Advances from officers     32,500       32,500               Total Current Liabilities     5,943,308       6,393,435  Total Liabilities     5,943,308       6,393,435  Stockholders' Equity:         Common stock, $.001 par value, 10,000,000 shares authorized, 8,339,260 shares issued     6,949       6,949  Accumulated comprehensive income (loss)     1,861,915       989,634  Capital in excess of par value     72,461      Retained earnings     (691,650)      (693,536)              Total Stockholders' Equity     1,249,675       303,047               Total Liabilities and Stockholders' Equity    $7,192,984      $6,696,482               
The accompanying notes are an integral part of these financial  statements.

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**AMERICAN ENERGY SERVICES, INC.STATEMENT OF OPERATIONS(Unaudited)**
  **Three Months EndedAugust 31,** **Six Months EndedAugust 31,**  **2000** **1999** **2000** **1999**Net Sales    $1,368,411      $2,042,307           3,304,381       3,445,427  Cost of sales     915,707       1,433,907           2,360,850       2,485,409                               Gross profit     452,704       608,400           943,531       960,018  Operating expenses     393,439       387,170           745,075       633,656                               Income (loss) from operations     59,265       221,230           198,456       326,362  Other expenses (income):                Interest, net     4,932       155,975           100,576       272,476  Other, net     (5,543)      (1,972)          (5,543)      (3,955)                                    (611)      154,003           95,033       268,521                               Net income (loss) before taxes     59,877       67,227           103,424       57,841  Income tax (expense) benefit     (17,963)      (4,781)          (30,963)      (4,781)                              Net income (loss)    $41,914      $62,446           72,461       53,060                               Basic income (loss) per share    $0.01      $0.01           0.01       0.01                               Diluted income (loss) per share    $0.01      $0.01           0.01       0.01                               Basic shares outstanding                 Diluted shares outstanding     8,339,260       6,948,966           8,339,260       6,948,966                               
 

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**AMERICAN ENERGY SERVICES, INC.  STATEMENT OF CASH FLOWS  (Unaudited)**
  **Three Months EndedAugust 31,** **Six Months EndedAugust 31,**  **2000** **1999** **2000** **1999**Cash Flows from Operating Activities:                 Net income (loss)    $41,914      $62,446      $72,461      $53,060  Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:                 Depreciation and amortization     44,290       57,164       88,581       95,168  Changes in operating assets and liabilities:                 Decrease in receivables     243,382       804,697       429,787       (253,631) Decrease in inventories         (222,443)          (522,493) (Increase) in costs in excess of billings on uncompleted contracts     868,565       (13,369)      (870,101)      159,237  (Decrease) increase in accounts payable and accrued expenses     (570,676)      (1,022,267)      (368,303)      (1,216,336) Decrease in deferred tax asset         4,781           4,781  (Increase) in prepaids and other         (13,942)          (13,942) Increase in billings in excess of cost on uncompleted contracts     (901,826)      (438,766)      (66)      692,147  Increase (decrease) in other assets/liabilities, net     (12,726)          (34,623)                              Net Cash Provided (Used) by Operating Activities     (287,078)      (781,699)      (682,264)      (1,002,009) Cash Flows from Investing Activities:                 Retirement (purchase) of property, plant and equipment     (56,388)      (20,816)      (55,928)      (20,816) Retirement (purchase) of trademarks, patents and drawings     (75,000)      (100)      (120,000)      (58,142) Redemption (purchase) of certificates of deposit             (6,130)                              Net Cash Provided (Used) in Investing Activities     (131,388)      (20,916)      (182,058)      (78,958) Cash Flows from Financing Activities:                 Capital contributions in excess of par     372,281       753,000       872,281       753,000  Net increase (payments) on lines of credit         270,292           229,055  Net (payments) on long-term obligations     (4,254)      43,677       (81,757)      1,599                           Net Cash (Used) Provided by Financing Activities     368,027       1,066,969       790,524       983,654  Prior year adjustment to retained earnings     1,887           1,887      Net (decrease) in cash and cash equivalents     (48,551)      264,354       (71,911)      (97,313) Cash and cash equivalents at beginning of period     52,418       (8,157)      75,778       353,510                           Cash and cash equivalents at end of period    $3,867      $256,197      $3,867      $256,197                           
 

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**AMERICAN ENERGY SERVICES  NOTES TO FINANCIAL STATEMENTS**

**NOTE 1 — General**

        The foregoing  financial statements have been prepared from the books and records of American  Energy Services, Inc. (“AES” or the “Company”) without audit.  In the opinion of management all adjustments, consisting only of normal recurring  adjustments necessary for a fair statement of results for the interim periods  presented, are reflected in the financial statements.

        These statements  should be read in conjunction with the financial statements and related notes  included in the Company's Annual Report of Form 10-KSB for the fiscal year ended  February 29, 2000 as well as the Quarterly Report on Form 10-QSB for the  fiscal quarter ended May 31, 2000.

**NOTE 2 — Revenue Recognition**

        Revenues are recorded  when flow control valves sold are shipped or when title passes. Title normally  passes from seller to buyer when the goods are shipped.

        In most instances,  sales involve a system of valves for a single installation and require long-term  contracts. When jobs on a long-term contract progress to a point where final  results can be estimated with reasonable accuracy, the percentage-of-completion  method is utilized. Percentages are derived by comparing costs incurred with  the estimated total costs and calculated percentages are used to allocate anticipated  total revenue and cost. If any losses on a contract-in-progress become apparent,  that loss is charged against the job in the period it was recognized.

**Item 2.   *****Management's Discussion and Analysis of Financial Condition and Results of Operations***

****Forward-Looking Statements**

        This material  contains “forward-looking” statements as defined in the Securities  and Exchange Acts of 1933 and 1934 that could involve substantial risk and uncertainties.  When expressions include words such as “anticipate”, “believe”,  “estimate”, “intend”, “expect”, “plan”,  and when similar expressions are used, they are intended to identify the statements  as forward-looking. American Energy Services, Inc. (“AES” or the “Company”)  relies on a variety of internal and external information to develop such statements.  Due to the inherent risks and limitations in that development process and the  relatively volatile nature of the industry in which the Company operates, actual  results, performance and achievements may differ materially from results suggested  by these forward-looking statements.

**Results of Operations**

***Three Months Ended August 31, 2000 versus Three Months Ended August 31, 1999***

**        Revenues  for the three months ended August 31, 2000 were $1,368,411 compared to $2,042,307  for the same period in 1999. The decline in revenues for the three months ended  August 31, 2000 as compared to revenues for the same period 1999 can be  attributed to the completion of two large valve projects by August 1999 which  greatly increased revenues for the period.

        While cost of  sales was down 36% or $518,200, the gross profit for the fiscal quarter ended  August 31, 2000 was down as well at 26% below the three-month period ended  August 31, 1999. This was primarily due to the reasons cited above.

        Operating expenses  increased slightly to $393,439 for three months ended August 31, 2000 as  compared with $387,170 operating expenses for the prior year period.

        Interest and other  expenses for the three months ended August 31, 2000 decreased $151,043  compared to the same period of last year. This decrease in interest expense  is related to AES ongoing efforts to negotiate more favorable terms on AES debt.

 

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        Net income before  taxes for the three months ended August 31, 2000 dropped slightly to $59,877  as compared to $67,227 in pretax income for the previous year's three month  period.

***Six Months Ended August 31, 2000 versus Six Months Ended August 31, 1999***

**        Revenues  for the six months ended August 31, 2000 were $3,304,381 or $141,046 down  from the same period of last year. This decrease can be attributed to the prior  completion of two large projects during the first six months of 1999 which greatly  increased second quarter 1999 revenues.

        Cost of sales  for the six month period ended August 31, 2000 was down $124,559 as would  be expected with lower prior year revenues. Further, gross profit dollars were  down 39% compared to the same period of last year. However, gross profit was  30% as a percent of revenues in the current period, compared to only 28% in  the same period of last year.

        Operating expenses  were up $111,419 in the six months ended August 31, 2000 compared to the  six months ended August 31, 1999. This increase can be attributed in part  to accounting adjustments made in the first quarter 2000 which better recognized  all accrued operating cost in their appropriate time period.

        Interest and other  expenses for the six months of the current fiscal year decreased $171,900 compared  to the same period of last year. This is primarily due to renegotiations with  debtors.

**Liquidity and Capital Resources**

        The primary sources  of the Company's liquidity for the six months ended August 31, 2000 included  cash available at the beginning of the year and more significantly capital contributed  by private investors. These funds were primarily used for the reduction of accounts  payable, coupled with an increase in inventories.

        During the six  months ended August 31, 2000, the working capital deficit improved to $1,230,568  when compared to the deficit at February 29, 2000 of $2,079,128. In the  past, short-term cash flows have been inadequate in the past to overcome the  working capital deficit. However, AES management's continuing efforts to raise  capital have benefited the Company's working capital position, as well as its  ability to move forward with an aggressive five year strategic plan. Management  is continually striving to improve its working capital position as well as grow  the Company through a variety of alternatives. These alternatives may include,  but are not limited to, debt restructuring, debt and equity offerings, cash  flow reengineering, joint ventures, mergers and acquisitions. Because of the  aggressive pursuit of such alternatives, the Company anticipates imminent improvement  in its financial position. However, there is no guarantee that such improvements  will occur, nor that such capital will be available when it is required or on  terms that are acceptable to the Company.

        Capital expenditures  during the six months ended August 31, 2000 included a note for two new  copy machines necessitated by the retirement of another. Only upon a continued  and significant improvement in the Company's financial position, will capital  expenditures be considered, and then only after diligent consideration and within  stringent guidelines.

**Year 2000**

        The year 2000  (“Y2K”) issue is the inability of computer systems to recognize the  change in year from 1999 to 2000. The issue affects both information technology  (“IT”) and non-IT systems. Because non-IT systems are typically embedded  technology, these are more difficult to assess than IT systems and often require  replacement rather than repair.

        AES has recognized  the significant uncertainty associated with the Y2K issue and has tested its  products for compliance. It is the Company's belief that substantially all necessary  modifications have been made to its products.

        However, the Company  is still in the process of reviewing its internal computer systems. An outside  vendor has assessed the Company's internal hardware and most of its software  with regard to Y2K compliance. No “mission critical” systems have  required significant modification or replacement, other than the management  information system discussed below.

 

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        The Company recently  contracted with Global Solutions (“InFiSy”) for installation and implementation  of a new management information system. The new system will replace an obsolete  legacy system. The decision during 1998 to replace the existing system was influenced  by the costs associated with making the obsolete system Y2K compliant. However,  the decision was made primarily due to the need for a fully integrated MRP II  (Material Resource Planning) system, the efficiencies to be gained, and the  reasonable, very favorable terms under which InFiSy will be acquired. The cost  of the InFiSy system, which will be amortized over its expected useful life  is approximately $50,000, exclusive of some possible internal costs of installation.

        AES is also in  the process of identifying and communicating with its suppliers and vendors  where failure by such third parties to achieve Y2K compliance could have a material  impact on the Company. For those suppliers or vendors who may pose a material  risk, contingency plans are in development.

        Other than the  capital expenditure for the InFiSy system, which will be spread over nine months,  the Company has absorbed approximately $8,000 to date for expenses related to  the Y2K project. The additional cost estimated to bring the project to completion  is $15,000, which will be treated as a period cost and expensed as incurred.

**PART II.   OTHER INFORMATION**

**Item 1.   *****Legal Proceedings***

**        The Company  is subject to legal proceedings and claims that arise in the ordinary course  of business. In the opinion of management, the amount of ultimate liability  with respect to these actions will not have a materially adverse affect on the  Company's results of operations or financial position.

**Item 5.   *****Exhibits and Reports on Form 8-K***

**a)   Exhibits

      27 **—** Financial  Data Schedule

b)   Reports of Form 8-K

      None

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