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

                                   Form 10-QSB

|X|  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITITES
     EXCHANGE ACT OF 1934. For the quarter ended October 31, 2002

|_|  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934




                                VTEX ENERGY, INC.
                 (Name of small business issuer in its charter)

                                     Nevada
                         (State or other jurisdiction of
                         incorporation or organization)

                                   76-0582614
                                (I.R.S. Employer
                               Identification No.)

                        8303 Southwest Freeway, Suite 950
                              Houston, Texas 77074
                     (Address of principal executive office)

                                 (713) 773-3284
                           (Issuer's telephone number)

                           Vector Energy Corporation
                                 (Former name)



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 |_|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court Yes |_| No |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

At November 15, 2002 there were  86,586,071  shares of no par value common stock
outstanding.

Transitional Small Business Disclosure Format (Check one) Yes |_| No |X|

===============================================================================





<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

The unaudited financial statements of the Company appearing at page F-1 through
F-11 hereof are incorporated by reference.

Item 2.     Management's Discussion and Analysis or Plan of Operation

On January 31, 2002, The Company had a working  capital  deficit of $ 6,413,820.
This is primarily due to net payables  assumed in the acquisition of oil and gas
properties, and the classification of the Company's secured debt as current. The
Company has begun to settle many of the assumed  payables for a  combination  of
cash and the Company's common stock.  Management believes that they will be able
to continue this.

On May 8, 1998,  the Company  entered into an asset  acquisition  transaction in
which it acquired its initial operating  assets.  Prior to this time the Company
had no employees or operations.

In exchange for its initial operating assets,  the Company issued 313,124 shares
of  common  stock,  30,000  shares  of  the  Company's  class  AA 6%  cumulative
convertible  preferred  stock and  assumed  $6.1  million  in  secured  debt and
$511,465 in accounts payable, net of accounts receivable and cash acquired.  The
secured  debt  assumed  by the  Company  is a  credit  facility  secured  by the
production on the acquired  producing  properties that allows the Company access
to a line of credit of up to $10 million with a national bank.

In  connection  with the above  transaction,  the  Company  additionally  issued
2,480,026  shares of common stock,  a warrant to purchase an additional  300,000
shares of common stock at $.10 per share,  and 500,000  shares of the  Company's
class  B  preferred   stock  to   subscribers   in  exchange  for  an  aggregate
consideration of $773,002 in cash and services.

On November 4, 1998, the Company  entered into an additional  asset  acquisition
transaction in which the Company issued  1,226,667  shares of common stock and a
$120,000  non-interest  bearing  note  and  assumed  $690,522  in bank  debt and
$600,954 in accounts  payable.  Subsequently,  the Company  issued an additional
500,000  shares of common  stock  under this  agreement.  The  Company  does not
believe any further shares will be issued to the Sellers under this agreement.

On March 7, 2000, the Company  closed a purchase and sale agreement  under which
the Company  issued  550,000  shares of common  stock.  In  accordance  with the
agreement,  the Company immediately repurchased 16,667 shares of common stock at
$3.00 per share. In addition,  the Company may be required to issue a maximum of
370,000 additional shares of common stock to the seller.

Effective  November 15, 2002,  Vector  Energy  Corporation  reincorporated  into
Nevada and changed its name to VTEX Energy,  Inc. The  reincorporation  and name
change was  accomplished  by a merger of Vector  Energy  Corporation  into a new
wholly owned subsidiary, VTEX Energy, Inc. One new share of VTEX Energy, Inc. is
to be issued for each 30 shares of Vector Energy Corporation held on October 25,
2002, the record date for the reincorporation. Liquidity and Capital Resources

                                      -1-
<PAGE>

Liquidity and Capital Resources

On October 19, 2000,  the Company sold 543,197  shares of common stock  together
with a warrant to purchase 543,197 shares of common stock at $0.50 per share and
an undivided 2.2% working  interest in two  nonproducing  oil and gas wells to a
private investor for a total  consideration of $100,000.00 in cash. The investor
is also  entitled to recoup his  investment  out of future  production  from the
wells,  if any. On October 19, 2000,  the closing  price of the common stock was
$0.24 per share.  The proceeds of this transaction were used to fund development
of the Mustang Island Properties.

On October 27, 2000,  the Company sold 407,398  shares of common stock  together
with a warrant to purchase 407,398 shares of common stock at $0.50 per share and
an undivided 2.2% working  interest in two  nonproducing  oil and gas wells to a
private investor for a total  consideration of $100,000.00 in cash. The investor
is also  entitled to recoup his  investment  out of future  production  from the
wells,  if any. On October 27, 2000,  the closing  price of the common stock was
$0.155 per share. The proceeds of this transaction were used to fund development
of the Mustang Island Properties.

Both of the  transactions  in October  2000 were treated by the Company as loans
repayable out of production for accounting purposes. The stock issued was booked
at its fair  market  value and treated as a loan cost to be  amortized  over the
life of the loan.

On December 27, 2000,  the Company sold certain  interest in 5 wells  located in
McClain,  Oklahoma and  undivided 10% interest in 6 wells located on the Mustang
Island Property to Old Jersey Oil Ventures, LLC. for $1,000,000.00.  The brother
of the President of the Company is a principal in Old Jersey Oil Ventures,  LLC.
At the same time Old  Jersey  Oil  Ventures  LLC,  as holder of  $591,849.41  in
indebtedness  owed by the  Company,  agreed to exchange  such  indebtedness  for
3,945,663  shares of the  Company's  common stock.  This  represented a price of
$0.15 per share. On December 27, 2000, the closing price of the common stock was
$0.125. Old Jersey Oil Ventures, LLC also exercised warrants to purchase 400,000
shares of the  Company's  common stock at $0.10 per share.  All shares issued to
Old Jersey Oil Ventures,  LLC. were issued in a private transaction and may only
be transferred in a private  transaction or pursuant to an applicable  exemption
to the registration requirements. The Company is under no obligation to register
such shares. The proceeds of this transaction were used as follows:  $250,000.00
to make payments to general  creditors;  $300,000.00 to make a principal payment
to the lender under the  Company's  secured  indebtedness  as a condition to the
lender's  agreement to enter into the fifth  amendment  to the credit  agreement
described below;  $50,000 reserved for capital investment on properties owned by
the Company in St. Mary's Parish, Louisiana; and $400,000.00 reserved to pay the
costs of this  registration  and to pay  principal  and  interest  due under the
Company's credit agreement.

On December 27,  2000,  the Company  amended its credit  agreement to reduce its
indebtedness  by  $3,000,000,  reschedule  principle  payments,  and  remove all
financial  covenants.  Under  the terms of the  amended  credit  agreement,  the
indebtedness was payable in three monthly  installments of $31,250  beginning on
January 15, 2001, seven monthly  installments of $125,000 beginning on April 15,
2001, and a final installment of $2,400,846 due on November 14, 2001. No further
borrowings are available.  As part of the amended credit agreement,  the Company
issued 3,000 shares of Class A-1 Cumulative  Convertible  Preferred Stock to the
bank in exchange for  $3,000,000  in  outstanding  indebtedness  and pledged its
interest in the Mustang  Island  properties as additional  collateral  under the
loan.

On November 15,  2001,  the Company  amended its credit  agreement to change the
repayment  schedule  to  $125,000  due on  December  15, 2001 and the balance of
principal and accrued but unpaid interest due on January 15, 2002.

                                      -2-

<PAGE>

On January 1, 2002,  the  Company  amended  its credit  agreement  to change the
repayment  schedule to $25,000 per month in principal and interest  beginning on
January 31, 2002 with the balance of principal  and accrued but unpaid  interest
due on April 15, 2002. In addition,  the Company  agreed to either sell, or have
entered into binding  agreements to sell,  certain of its oil and gas properties
by February  20,  2002 or to enter into a binding  agreement  with a  nationally
recognized  oil and gas  auction  house by March  28,  2002 for the sale of such
properties.  All of the proceeds from the sale of such properties  would be used
to reduce the Company's indebtedness.

On April 1, 2002, the Company  amended its credit  agreement to extend the final
due date of  principal  and accrued but unpaid  interest  to June 24,  2002.  In
addition,  the date by which the  Company  had to enter into a binding  contract
with an auction house was extended to April 30, 2002.

On June 24, 2002, the Company  amended its credit  agreement to extend the final
due date of principal and accrued but unpaid interest to July 24, 2002.

On July 24, 2002, the Company amended its credit agreement to remove the $25,000
per month  payment and to extend the final due date of principal and accrued but
unpaid interest to August 24, 2002.

In accordance with the terms of the credit  agreement,  as amended,  the Company
entered into a binding contract with an auction house on two separate  occasions
for the sale of  certain  of its  producing  properties.  On June 6,  2002,  the
Company  closed a sale of certain  of its  producing  properties  for total cash
consideration  of $600,100.  Net proceeds  received from the sale, which totaled
$481,027, were used to pay down the Company's bank debt.

On September 10, 2002, the Company  renegotiated the terms of its  indebtedness.
Under the terms of the new  agreement,  the  Company  will pay  $300,000  to its
lender by September 30, 2002.  The Company will then be relieved of all payments
until December 2, 2002. The Company has the option on or before December 2, 2002
to pay the lender either an additional  #300,000 in cash or $150,000 in cash and
$200,000 in production payments in exchange for the forgiveness of the remainder
of its indebtedness  amounting to approximately $1.6 million.  In addition,  the
lender has agreed to convert all of its $3 million  preferred  stock into common
stock eauivalent to a 45% ownership position in the Company.

On August 30, 2002,  the Company  closed a sale of certain of its  producing oil
and gas  properties  for total cash  consideration  of  $301,600.  Net  proceeds
received  from the sale,  which  totatled  $276,697,  were paid to the Company's
lender as part of the $300,000 payment due by September 30, 2002. The balance of
the $300,000 payment was made by the due date.

On November 25, 2002,  the Company closed a sale of certain of its producing oil
and gas  properties  for total  cash  consideration  of  $95,000.  Net  proceeds
received from the sale, which totaled $82,660, were paid to the Company's lender
as part of the payment due by December 2, 2002.

The Company  failed to make the remaining  $67,340  payment due to the lender by
December 2, 2002.  However,  the  Company  reached a verbal  agreement  with the
lender to accept an  additional  payment  of  $17,740  in cash and  $150,000  in
production  payments.  Such cash  payment was made on  December  13,  2002.  The
Company  and the  lender are  currently  preparing  documents  to  finalize  the
forgiveness of the remainder of its indebtedness amounting to approximately $1.8
million. However, there can be no assurance that such forgiveness will occur.

                                      -3-
<PAGE>

For the past six months, the Company's oil and gas revenues have been sufficient
to  satisfy  its oil and gas  operating  expenses  and  interest  payments.  The
Company's  general  and  administrative  expenses,  development  costs  and debt
principal payments have been funded primarily from the proceeds from the sale of
oil and gas  properties  and advances from related  parties.  Additional  equity
funding will be required to meet the current needs of the Company. Any inability
of the Company to raise additional  capital under such  circumstances will limit
the  development  of most of its oil and  gas  properties  and may  prevent  the
Company from meeting its cash requirements. If the wells currently being brought
into production perform as expected such financing should be available; however,
there is no assurance  that such financing will in fact be available or that the
wells  will,  in  fact,  perform  as  expected.  In the  absence  of  such  well
performance  or  financing,  the company will not be able to meet its  financial
obligations

The Company is currently negotiating with many of the vendors for which accounts
payable were assumed in the asset acquisition transactions,  and believes that a
significant  portion of these payables can be satisfied  through the issuance of
common stock. If the Company is unsuccessful in these  negotiations,  additional
equity funding may be needed.

The Company is aggressively  seeking additional property  acquisitions with near
term revenue generating capability and future development potential. The Company
is currently  evaluating  several potential  acquisitions  which would utilize a
combination  of the  issuance  of its  equity  securities  and  additional  debt
financing.

                                       -4-
<PAGE>
                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

The  Company is  involved  from time to time in  various  claims,  lawsuits  and
administrative  proceedings  incidental  to  its  business.  In the  opinion  of
management,  the  ultimate  liability  thereunder,  if  any,  will  not  have  a
materially adverse effect on the financial condition or results of operations of
the Company

Item 2.     Changes in Securities and Use of Proceeds

The  information  required by this item is  provided  in the Notes to  Financial
Statements  appearing at pages F-7 through F-11 hereof and are  incorporated  by
reference.

Item 3.     Defaults Upon Senior Securities

None

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

None.

Item 5.     Other Information

None

Item 6.     Exhibits and Reports on Form 8-K

None

                                   SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                        VECTOR ENERGY CORPORATION
                                        (Registrant)


                                        By  /S/ Randal B. McDonald, Jr,
                                            ------------------------------------
                                            Randal B. McDonald, Jr.
                                            Chief Financial Officer
                                            Principal Financial and Accounting
                                            Officer

                                            Date: December 20, 2002


                                        By  /S/ Stephen F. Noser,
                                            ------------------------------------
                                            Stephen F. Noser
                                            President
                                            Principal Executive Officer

                                            Date: December 20, 2002

                                       -5-

<PAGE>






















                               VTEX Energy, Inc.

                      (Formerly Vector Energy Corporation)

                              FINANCIAL STATEMENTS

                                October 31, 2002

                                   (Unaudited)
















                                       F-1



<PAGE>
















                                    CONTENTS



                                                              Page
                                                              ----

UNAUDITED CONSOLIDATED BALANCE SHEET                          F-3 to F-4

UNAUDITED CONSOLIDATED STATEMENT OF INCOME                    F-5

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS                F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    F-7 to F-11









                                       F-2


<PAGE>

                               VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
                           CONSOLIDATED BALANCE SHEET
                                October 31, 2002
                                   (Unaudited)






ASSETS

CURRENT ASSETS
  Cash                                                       $        694
  Certificates of deposit                                          75,000
  Revenue accounts receivable                                      37,214
  JIB accounts receivable                                          36,105
                                                             ------------
     Total current assets                                         149,013
                                                             ------------
PROVED OIL AND GAS PROPERTIES, USING THE
  FULL COST METHOD OF ACCOUNTING                               16,571,811


Less accumulated depreciation, depletion, amortization
  and impairment                                                1,013,668
                                                             ------------
Net oil and gas properties                                     15,558,143
                                                             ------------
OTHER ASSETS
  Other property and equipment, less accumulated
    depreciation of $70,085                                        36,576
  Long term accounts receivable                                   120,000
  Other assets                                                      8,602
                                                             ------------
     Total other assets                                           165,178
                                                             ------------
                                                             $ 15,872,334
                                                             ============

    The accompanying notes are an integral part of the financial statements


                                       F-3

<PAGE>


                               VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
                           CONSOLIDATED BALANCE SHEET
                                October 31, 2002
                                   (Unaudited)



LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Line of Credit                                             $  1,959,143
  Notes payable                                                    18,506
  Production payments payable                                   1,184,518
  Accounts payable - trade                                      1,564,773
  Royalties payable                                               402,434
  Working interest revenues payable                                80,636
  Taxes payable                                                   172,438
  Advances from related party                                     410,598
  Accrued payroll                                                 106,883
  Accrued dividends payable                                       460,000
  Accrued interest                                                202,904
                                                             -------------
     Total current liabilities                                  6,562,833
                                                             -------------
STOCKHOLDERS' EQUITY
  Preferred stock class A-1, cumulative convertible;
    $1,000 par value per share, 3,000 shares authorized;
    issued and outstanding                                      3,000,000
  Preferred stock class B, noncumulative nonconvertible;
    $1 par value per share, 500,000 shares authorized;
    500,000 shares issued and outstanding                          50,000
Common stock, no par value; 100,000,000
    shares authorized; 78,706,449 shares issued and
    outstanding at October 31, 2002                             2,953,333
  Additional paid-in capital                                   21,124,503
  Retained earnings                                           (17,818,335)
                                                             -------------
     Total stockholders' equity                                 9,309,501
                                                             -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 15,872,334
                                                             =============

    The accompanying notes are an integral part of the financial statements

                                       F-4


<PAGE>

                               VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
                        CONSOLIDATED STATEMENT OF INCOME
                                Six Months Ended
                                October 31, 2002
                                   (Unaudited)





REVENUES

  Oil sales                                                  $      52,487
  Gas sales                                                        152,465
  Production byproducts                                              9,010
  Interest Income                                                    2,164
                                                             --------------
      Total revenues                                               216,126
                                                             --------------
EXPENSES

  Production taxes                                                  12,885
  Lease operating expense                                          279,369
  Depletion of oil and gas properties                               51,148
  Interest expense                                                 106,950
  General and administrative expense                             1,112,344
                                                             --------------
      Total expenses                                             1,562,696
                                                             --------------
Net Loss                                                        (1,346,570)

Preferred Dividend                                                 120,000
                                                             --------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS                    $  (1,466,570)
                                                             ==============

NET LOSS PER COMMON SHARE
   Basic                                                           $ (0.02)
                                                                   ========

 WEIGHTED AVERAGE NUMBER SHARES OUTSTANDING                     64,375,463
                                                             ==============


    The accompanying notes are an integral part of the financial statements

                                       F-5


<PAGE>

                               VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                Six Months Ended
                                October 31, 2002
                                   (Unaudited)





CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                   $  ( 1,466,570)
  Adjustments to reconcile net loss to
    net cash used by operating activities:
      Depletion of oil and gas properties                            51,148
      Depreciation expense                                            7,552
      Stock issued for consulting fees                              780,000
      Decrease in certificates of deposit                            25,000
      Decrease in accounts receivable                               123,895
      Increase in accounts payable                                  128,572
      Decrease in royalties and revenues payable                (    12,317)
      Increase in accrued dividends payable                         120,000
      Decrease in other current liabilities                             751
                                                             ---------------
         Net cash used by operating activities                  (   221,673)
                                                             ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Development Costs Incurred                                    (    64,938)
  Sales of oil and gas properties                                   887,698
                                                             ---------------
         Net cash provided by investing activities                  822,757
                                                             ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Payment on Line of Credit                                     (   817,261)
  Note repayments                                               (    34,170)
  Advances from related parties                                     149,500
                                                             ---------------
         Net cash used by financing activities                  (   701,931)
                                                             ---------------
NET DECREASE IN CASH
  AND CASH EQUIVALENTS                                          (   100,847)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD                                               101,541
                                                             ---------------
CASH AND CASH EQUIVALENTS,
  END OF PERIOD                                              $          694
                                                             ===============


    The accompanying notes are an integral part of the financial statements

                                       F-6


<PAGE>

                               VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
              Notes to Unaudited Consolidated Financial Statements
                                October 31, 2002

Management's Representation of Interim Financial Information

The  accompanying  financial  statements  have been  prepared  by Vector  Energy
Corporation (The Company) without audit pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission.  Certain  information  and  footnote
disclosure normally included in the financial  statements prepared in accordance
with generally accepted accounting  principles have been condensed or omitted as
allowed  by such  rules  and  regulations,  and  management  believes  that  the
disclosures are adequate to make the information presented not misleading. These
financial  statements  include all of the  adjustments  which, in the opinion of
management,  are  necessary to a fair  presentation  of  financial  position and
results of operations.  These financial statements should be read in conjunction
with the audited financial  statements included in the Company's Form 10-KSB, as
of April 30, 2002.

Business and Organization

Vector Energy  Corporation,  a Texas corporation  (together with its subsidiary,
Vector Exploration,  Inc.,  collectively,  "the Company") was formed on June 18,
1998 as a result of an  agreement  and plan of  reorganization.  The  Company is
primarily engaged in the acquisition, development, production and exploration of
oil and natural gas properties in the United States.

Effective  November 15, 2002,  Vector  Energy  Corporation  reincorporated  into
Nevada and changed its name to VTEX Energy,  Inc. The  reincorporation  and name
change was  accomplished  by a merger of Vector  Energy  Corporation  into a new
wholly owned subsidiary, VTEX Energy, Inc. One new share of VTEX Energy, Inc. is
to be issued for each 30 shares of Vector Energy Corporation held on October 25,
2002, the record date for the reincorporation. Summary of Significant Accounting
Policies

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  wholly  owned  subsidiary.   All  significant   intercompany  accounts  and
transactions have been eliminated in consolidation.

Oil and Gas Properties

The  Company  follows  the full cost  method of  accounting  for its oil and gas
properties.  All costs associated with property  acquisition,  exploration,  and
development  activities are capitalized in a single,  United States cost center.
Internal  costs  directly  identified  with  the  acquisition,  exploration  and
development  activities of the Company are also  capitalized.  Capitalized costs
are amortized on the unit-of-production basis using proved oil and gas reserves.
Capitalized  costs are  limited to the  present  value of  estimated  future net
revenues  less  estimated  future  expenditures  using a discount  factor of ten
percent.  Sales  and  abandonments  of oil and gas  properties  are  treated  as
reductions  of the  capitalized  cost pool.  At October 31, 2002,  there were no
costs of  unproved  properties  or major  development  projects  included in the
capitalized cost pool.

Other Property and Equipment

Other  property  and  equipment  of the Company  consists  primarily of computer
equipment,  vehicles and  furniture  and fixtures,  which are  depreciated  over
estimated  useful lives,  ranging from three to seven years,  on a straight-line
basis.

                                      F-7
<PAGE>
                                VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
        Notes to Unaudited Consolidated Financial Statements (continued)
                                October 31, 2002

Loss Per Share

Loss per share has been calculated  using the weighted  average number of shares
outstanding. Outstanding warrants and other potentially dilutive securities have
been excluded from the  calculation of loss per share,  as their effect would be
anti-dilutive.

Statement of Cash Flows

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid debt instruments  purchased with an original  maturity of three months or
less to be cash equivalents.

The following is a summary of all  significant  noncash  investing and financing
activities  and payments made for interest and income taxes for the period ended
October 31, 2002:

Noncash activities:
     Common stock issued for consulting fees                    $   780,000
     Common stock issued in settlement of payables                   48,500
Cash payments:
     Interest                                                   $    39,349

Acquisitions of Oil and Gas Properties

On May 8, 1998, the Company  acquired  various working and royalty  interests in
wells located in Texas,  Louisiana and Oklahoma. To effect the transaction,  the
Company issued 30,000 shares of class AA preferred stock,  valued at $3,000,000,
and 313,124 shares of common stock, valued at $939,372. In addition, the Company
assumed  $6,100,000  in bank  debt and  $511,465  in  accounts  payable,  net of
accounts receivable and cash acquired.  The Company has capitalized  $251,704 in
expenses  incurred  in  conjunction  with this  transaction.  Subsequently,  the
Company  issued  116,014  shares  of  common  stock,  valued  at  $163,065,  for
additional working interests in certain of the properties acquired.

On November 4, 1998, the Company  acquired  various  working  interests in wells
located in Louisiana, Texas and Oklahoma. To effect the transaction, the Company
issued  1,226,667 shares of common stock,  valued at $1,840,000,  and a $120,000
non-interest  bearing  note payable to the  sellers.  In  addition,  the Company
assumed $690,522 in bank debt and $600,954 in accounts payable.  The Company has
capitalized  $15,145 in expenses  incurred in conjunction with this transaction.
The  Company  was also  required  to expend a minimum  of  $500,000  in  capital
investment on the properties  acquired within nine months.  Because such capital
investment  was not made,  the sellers  were  entitled to receive an  additional
500,000 shares of common stock. Subsequently,  the Company exchanged the working
interests  acquired in certain  properties  in Texas and $30,000 for  additional
working interests in the properties acquired in Louisiana.

On March 7, 2000,  the  Company  closed a  purchase  and sale  agreement  with a
company,  which is a debtor in possession in a Chapter 11 Bankruptcy.  Under the
agreement, the Company acquired all of the Bankrupt Debtor's interest in a block
located in the Offshore Texas,  Mustang Island Area for 550,000 shares of common
stock  valued  at  $550,000.  In  accordance  with the  agreement,  the  Company
immediately  repurchased 16,667 shares of common stock at $3.00 per share, for a
total of $50,000. Under the terms of the agreement,  in the event that the daily
rate of production from the properties  acquired averages at least 5,000 Mcf per
day over a  complete  calendar  month the  seller  has the right to put  150,000
shares of common stock to the Company at $3.00 per share. If the seller fails to
exercise such right,  the Company has the right to call 150,000 shares of common
stock at $3.00 per share.  In  addition,  the Company may be required to issue a
maximum of 370,000  additional  shares of common  stock to the seller based upon
the required future development costs associated with the properties acquired

                                       F-8

<PAGE>

                                VTEX Energy, Inc.
                      (Formerly Vector Energy Corporation)
        Notes to Unaudited Consolidated Financial Statements (Continued)
                                October 31, 2002


Line of Credit

The Company has a $10 million  revolving credit note with a national bank, which
terminated  on November 15, 2001.  Interest on the note is payable  monthly at a
floating rate, which was 5.75% at October 31, 2002. The borrowing base under the
note is determined  periodically based upon the collateral value assigned to the
mortgaged properties, and was $1,959,143 at October 31, 2002. The borrowing base
may be  redetermined  at the  Bank's  sole  discretion.  The  Company  does  not
anticipate  that the  borrowing  base  under the note can be  increased  without
incurring significant development costs.

On December 27,  2000,  the Company  amended its credit  agreement to reduce its
indebtedness  by  $3,000,000,  reschedule  principle  payments,  and  remove all
financial  covenants.  Under  the terms of the  amended  credit  agreement,  the
indebtedness was payable in three monthly  installments of $31,250  beginning on
January 15, 2001, seven monthly  installments of $125,000 beginning on April 15,
2001, and a final installment of $2,400,846 due on November 14, 2001. No further
borrowings are available.  As part of the amended credit agreement,  the Company
issued 3,000 shares of Class A-1 Cumulative  Convertible  Preferred Stock to the
bank in exchange for  $3,000,000  in  outstanding  indebtedness  and pledged its
interest in the Mustang  Island  properties as additional  collateral  under the
loan.

On November 15,  2001,  the Company  amended its credit  agreement to change the
repayment  schedule  to  $125,000  due on  December  15, 2001 and the balance of
principal and accrued but unpaid interest due on January 15, 2002.

On January 1, 2002,  the  Company  amended  its credit  agreement  to change the
repayment  schedule to $25,000 per month in principal and interest  beginning on
January 31, 2002 with the balance of principal  and accrued but unpaid  interest
due on April 15, 2002. In addition,  the Company  agreed to either sell, or have
entered into binding  agreements to sell,  certain of its oil and gas properties
by February  20,  2002 or to enter into a binding  agreement  with a  nationally
recognized  oil and gas  auction  house by March  28,  2002 for the sale of such
properties.  All of the proceeds from the sale of such properties  would be used
to reduce the Company's indebtedness.

On April 1, 2002, the Company  amended its credit  agreement to extend the final
due date of  principal  and accrued but unpaid  interest  to June 24,  2002.  In
addition,  the date by which the  Company  had to enter into a binding  contract
with an auction house was extended to April 30, 2002.

On June 24, 2002, the Company amended its credit agreement to extend the final
due date of principal and accrued but unpaid interest to July 24, 2002.

On July 24, 2002, the Company amended its credit agreement to remove the $25,000
per month  payment and to extend the final due date of principal and accrued but
unpaid interest to August 24, 2002.

In accordance with the terms of the credit  agreement,  as amended,  the Company
entered into a binding contract with an auction house on two separate  occasions
for the sale of  certain  of its  producing  properties.  On June 6,  2002,  the
Company  closed a sale of certain  of its  producing  properties  for total cash
consideration  of $600,100.  Net proceeds  received from the sale, which totaled
$481,027, were used to pay down the Company's bank debt.

                                       F-9
<PAGE>
                                VTEX Energy, Inc.
                            Vector Energy Corporation
        Notes to Unaudited Consolidated Financial Statements (Continued)
                                October 31, 2002

On September 10, 2002, the Company  renegotiated the terms of its  indebtedness.
Under the terms of the new  agreement,  the  Company  will pay  $300,000  to its
lender by September 30, 2002.  The Company will then be relieved of all payments
until December 2, 2002. The Company has the option on or before December 2, 2002
to pay the lender either an additional  #300,000 in cash or $150,000 in cash and
$200,000 in production payments in exchange for the forgiveness of the remainder
of its indebtedness  amounting to approximately $1.6 million.  In addition,  the
lender has agreed to convert all of its $3 million  preferred  stock into common
stock eauivalent to a 45% ownership position in the Company.

On August 30, 2002,  the Company  closed a sale of certain of its  producing oil
and gas  properties  for total cash  consideration  of  $301,600.  Net  proceeds
received  from the sale,  which  totatled  $276,697,  were paid to the Company's
lender as part of the $300,000  payment due by September 30, 2002.The balance of
the $300,000 payment was made by the due date.

On November 25, 2002,  the Company closed a sale of certain of its producing oil
and gas  properties  for total  cash  consideration  of  $95,000.  Net  proceeds
received from the sale, which totaled $82,660, were paid to the Company's lender
as part of the payment due by December 2, 2002.

The Company  failed to make the remaining  $67,340  payment due to the lender by
December 2, 2002.  However,  the  Company  reached a verbal  agreement  with the
lender to accept an  additional  payment  of  $17,740  in cash and  $150,000  in
production payments. Such cash payment was made on December 13, 2002.

Notes Payable

Other notes payable at October 31, 2002  consisted of $18,506 in unsecured 9% to
10.5% notes issued to vendors in settlement of accounts  payable.  The notes are
past their due dates and are due on demand.

Stockholder's Equity

Preferred Stock

The Company has 20,000,000 authorized shares of preferred stock.

The  Company  is  authorized  to issue  3,000  shares  of Class  A-1  Cumulative
Convertible  Preferred  Stock (Class A-1 Preferred  Stock).  Class A-1 Preferred
Stock was issued for $1,000 per share and is entitled to receive cumulative cash
dividends  at the annual  rate of 8%  payable  annually  in  arrears  commencing
December 1, 2001 when and as declared by the Board of  Directors.  All shares of
Class A-1  Preferred  Stock  were  issued  to the  Company's  secured  lender on
December 27, 2000 as  consideration  for the reduction in the Company's  secured
indebtedness by $3,000,000.00  and remain  outstanding.  The Class A-1 Preferred
Stock will convert to common stock upon the effective date of this registration.
Each  share of Class  A-1  Preferred  Stock  will  convert  into  shares  of the
Company's  number of shares of common  stock equal to $100.00 per share plus all
accumulated and unpaid dividends (the "Liquidation Value") divided by the lesser
of $0.50 or 90% of the average of the highest bid and lowest asked prices of the
Common Stock over a period of twenty-one  consecutive Trading Days ending on the
Trading Day  immediately  prior to the date of conversion.  In addition,  on the
first  anniversary  of the  conversion,  each  holder may be entitled to receive
additional shares  ("Contingent  Shares") equal to 110% of the Liquidation Value
divided by the average of the highest bid and lowest  asked prices of the Common
Stock over a period of twenty-one consecutive Trading Days ending on the Trading
Day immediately prior to the first anniversary date of such conversion minus the
shares  received by such  holder  upon the  conversion.  If the  computation  of
Contingent  Shares results in a negative number then no Contingent  Shares shall
be issued.  Each share of Class A-1 Preferred Stock is entitled to cast a number
of votes equal to the number of shares of common  stock into which the Class A-1
Preferred Stock is convertible. Accrued and unpaid dividends totaled $460,000 at
October 31, 2002

                                      F-10
<PAGE>
                               VTEX Energy, Inc.
                            Vector Energy Corporation
        Notes to Unaudited Consolidated Financial Statements (Continued)
                                October 31, 2002

The Company is authorized to issue 500,000 shares of Class B Preferred Stock,
par value $1.00 per share. Class B Preferred Stock is subordinate to Class AA 6%
Preferred Stock in priority, both of which are senior to any and all capital
stock. The holders of Class B Preferred Stock are not entitled to receive any
dividends. As of October 31, 2002 500,000 shares of the Class B Preferred Stock
were issued and outstanding. The Class B Preferred Stock is redeemable in whole,
but not in part, at the option of the Corporation by resolution of the
Corporation's Board of Directors at anytime at $1.00 per share. Each share of
Class B Preferred Stock has the voting rights equal to 100 shares of the
Company's common stock. The holders of Class B shares are entitled to elect at
least two directors to the Board of Directors of the Corporation. The holders of
Class B Preferred Stock voting as a class will have the right to remove without
cause at any time and replace any director such holders have elected.

Stock Options and Warrants

The Company has granted  options to certain key employees to purchase  2,080,000
shares of the Company's  common stock at purchase  prices  ranging from $0.15 to
$0.23 per share.  These options  expire on dates ranging from August 25, 2005 to
March 1, 2006 and are  non-transferable.  The  options,  which were  issued at a
price equal to or exceeding the market value of the underlying stock on the date
of the grant,  are not  intended to qualify as  incentive  stock  options  under
Internal  Revenue  Code  Section  422.  The Company  follows the  provisions  of
Statement of Financial  Accounting Standards No. 123, Accounting for Stock Based
Compensation (SFAS No. 123) using a Black Scholes option pricing model.

Also  outstanding  at October 31, 2002 are  warrants for the purchase of 950,595
shares of the Company's common stock at a purchase price of $0.50 per share. The
warrants expire on October 19, 2003 and are transferable.

                                      F-11