<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

 X   Quarterly report under Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended                     MARCH 31, 2001
                               ----------------------------------

         Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from ____________ to ______________

                             BLUE RIDGE ENERGY, INC.

        (Exact Name of Small Business Issuer as Specified in Its Charter)

           NEVADA                                       61-1306702
-------------------------------                      -------------------
(State or Other Jurisdiction of                        (IRS Employer
 Incorporation or Organization)                      Identification No.)

              632 ADAMS STREET, SUITE 710, BOWLING GREEN, KY 42101
--------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                  (270) 842-2421
--------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

                                      N/A
---------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

         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 CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 6,085,244



<PAGE>   2


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
      FINANCIAL STATEMENTS OF REGISTRANT

         INDEX                                                           NUMBER

         Condensed Balance Sheets (Unaudited) as of March 31, 2001
                  and December 31, 2000.                                  2-3
         Condensed Statements of Income (Unaudited) for the three
                  months ended March 31, 2001 and 2000.                     4
         Condensed Statements of Cash Flows (Unaudited) for the three
                  months ended March 31, 2001 and 2000.                     5
         Notes to Condensed Financial Statements (Unaudited)             6-12
         Report of Review by  Independent Accountants                      13

The condensed financial statements of the Registrant included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Although certain information normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been condensed or omitted, the Registrant believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and the notes thereto included in the Form 10-KSB of
the Registrant for its fiscal year ended December 31, 2000.

The condensed financial statements included herein reflect all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary to present a fair statement of the results for the
interim periods.

The results for interim periods are not necessarily indicative of trends or of
results to be expected for a full year.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS            14-17

                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                 17
ITEM 2.  CHANGES IN SECURITIES                                             17
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                   17
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               17
ITEM 5.  OTHER INFORMATION                                                 17
ITEM 6.  EXHIBITS AND REPORTS OF FORM 8-K                                  17
SIGNATURES                                                                 18


<PAGE>   3



                             BLUE RIDGE ENERGY, INC.
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                               MARCH 31,            DECEMBER 31,
                                                                                 2001                   2000
ASSETS                                                                      --------------         -------------
------
<S>                                                                         <C>                    <C>
CURRENT ASSETS:
Cash                                                                          $    295,028           $   918,963
Accounts Receivable:
   Managed Limited Partnerships                                                     29,881               278,390
   Trade and Other                                                                  42,240                 9,302
   Advances to Related Parties                                                     111,737                17,155
Prepaid Expenses                                                                    77,545               129,048
                                                                              ------------           -----------

         TOTAL CURRENT ASSETS                                                      556,431             1,352,858

PROPERTY AND EQUIPMENT, NET                                                      3,794,432             3,770,580

OTHER ASSETS, NET                                                                      490                   490
                                                                              ------------           -----------

TOTAL ASSETS                                                                   $ 4,351,353           $ 5,123,928
                                                                              ============           ===========
</TABLE>



    The accompanying notes are an integral part of these financial statements




                                       2
<PAGE>   4

                             BLUE RIDGE ENERGY, INC.
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                MARCH 31,           DECEMBER 31,
                                                                                  2001                  2000
                                                                              ------------          ------------
<S>                                                                           <C>                   <C>
LIABILITIES AND
---------------
STOCKHOLDERS' EQUITY
--------------------

CURRENT LIABILITIES:
Accounts Payable and Accrued Liabilities                                      $     52,499          $     43,251
Drilling Advances                                                                  450,000               918,000
Current Portion Long Term Debt                                                     287,314               287,314
                                                                              ------------          ------------
         TOTAL CURRENT LIABILITIES                                                 789,813             1,248,565

LONG TERM DEBT                                                                     271,615               297,631
DEFERRED INCOME TAX LIABILITY                                                       75,906               151,830
                                                                             --------------         ------------
         TOTAL LIABILITIES                                                       1,137,334             1,698,026

COMMITMENTS AND CONTINGENCIES                                                        ---                    ---

STOCKHOLDERS' EQUITY:
Preferred Stock, $0.001 par value; 5,000,000 shares authorized; 429,250 and
    430,000 shares issued and outstanding at March 31, 2001 and December 31,
    2000, respectively (liquidation preference of $2,146,250 at March 31, 2001
    and $2,150,000 at December 31, 2000)                                               429                   430
Common Stock, $0.005 par value; 20,000,000
    shares authorized; 6,085,244 and 6,084,494 shares
    issued and outstanding at  March 31, 2001
    and December 31, 2000, respectively                                             30,426                30,422
Additional Paid-In Capital                                                       5,631,967             5,631,970
Accumulated Deficit                                                             (2,448,803)           (2,236,920)
                                                                              ------------           -----------
         TOTAL STOCKHOLDERS' EQUITY                                              3,214,019             3,425,902
                                                                              ------------           -----------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                                                           $ 4,351,353           $ 5,123,928
                                                                               ===========           ===========
</TABLE>



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



                                       3
<PAGE>   5


                             BLUE RIDGE ENERGY, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                         THREE MONTHS ENDED
                                                                                               MARCH 31,
OPERATING REVENUES:                                                                   2001                2000
                                                                                 -------------     -------------
<S>                                                                                <C>                 <C>
Turnkey Contract Sales                                                             $   468,000         $ 860,612
Management Fees                                                                          ---              41,695
Contract Drilling Services                                                             319,513           302,723
Oil and Gas Sales                                                                       75,617            68,845
                                                                                 -------------     -------------
         Total Operating Revenues                                                      863,130         1,273,875

OPERATING COSTS AND
    OTHER EXPENSES:
Turnkey Contract Costs                                                                 303,571           693,478
Drilling Services Costs                                                                342,876           266,136
Lease Operating Costs                                                                   24,975            13,525
Depreciation, Depletion
   and Amortization                                                                     36,000            36,000
Marketing Costs                                                                         86,187            20,730
General and Administrative Costs                                                       281,553            86,192
                                                                                 -------------     -------------
         Total Operating Costs                                                       1,075,162         1,116,061
                                                                                 -------------     -------------

OPERATING INCOME (LOSS)                                                               (212,032)          157,814

OTHER INCOME (EXPENSE):
Interest Income (Expense)                                                              (11,275)           (9,335)
                                                                                 -------------     -------------
         Total Other Income                                                            (11,275)           (9,335)
                                                                                 -------------     -------------

INCOME (LOSS) BEFORE TAXES                                                            (223,307)          148,479
Income Tax Provision                                                                    75,924           (48,998)
                                                                                 -------------     -------------
NET INCOME (LOSS)                                                                  $  (147,383)        $  99,481
                                                                                ==============     =============

EARNINGS (LOSS) PER
COMMON SHARE:
     Basic                                                                         $    (0.03)         $   (0.01)
                                                                                   ==========          =========
     Diluted                                                                       $    (0.03)         $   (0.01)
                                                                                   ==========          =========

Weighted Average Common
         Shares Outstanding                                                         6,084,869          5,809,794
                                                                                   ==========          =========
</TABLE>


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




                                       4
<PAGE>   6

                             BLUE RIDGE ENERGY, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                             THREE MONTHS ENDED
                                                                                                  MARCH 31,
                                                                                            2001           2000
                                                                                       -------------  -------------
<S>                                                                                    <C>            <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income (Loss)                                                                      $  (147,383)   $      99,481
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
  Depreciation, Depletion and Amortization                                                  36,000           36,000
  Increase (Decrease) in Deferred Taxes                                                    (75,924)          48,998
  Decrease (Increase) in Accounts Receivable                                               215,571         (693,295)
  Decrease in Drilling Advances                                                           (468,000)            ---
  Increase (Decrease) in Accounts Payable
       and Accrued Liabilities                                                               9,248          (56,723)
                                                                                       -------------  -------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES                                                                      (430,488)        (565,539)

CASH FLOWS FROM
INVESTING ACTIVITIES:
Decrease (Increase) in Advances to Affiliate                                               (94,582)         626,593
Decrease (Increase)  in Prepaid Expenses                                                    51,503           (9,726)
Purchase of Oil and Gas Properties                                                         (59,852)         (44,525)
                                                                                       -------------  -------------
NET CASH PROVIDED (USED)BY
  INVESTING ACTIVITIES                                                                    (102,931)         572,342

CASH FLOWS FROM
FINANCING ACTIVITIES:
Retirements of Long Term Debt                                                              (26,016)         (56,883)
Issuance of Preferred Stock                                                                   ---           279,850
Payments of Preferred Stock Dividends                                                      (64,500)        (155,450)
                                                                                       -------------  -------------
NET CASH PROVIDED (USED)
    BY FINANCING ACTIVITIES                                                                (90,516)          67,517
                                                                                       -------------  -------------
NET INCREASE (DECREASE) IN CASH                                                           (623,935)          74,320
CASH AT BEGINNING OF PERIOD                                                                918,963          131,465
                                                                                       -------------  -------------
CASH AT END OF PERIOD                                                                  $   295,028    $     205,785
                                                                                       =============  =============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid for Interest                                                                 $    11,275    $      11,250
                                                                                       =============  =============
Cash Paid for Income Taxes                                                             $       ---    $         ---
                                                                                       =============  =============
</TABLE>


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


                                       5
<PAGE>   7


                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000

         1.   OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         GENERAL

         Blue Ridge Energy, Inc., (the Company), a Nevada corporation, was
organized in November, 1994, as Gem Source, Incorporated (Gem Source), and
subsequently changed the name of the Company to Blue Ridge Energy, Inc. in May,
1996. The Company has offices at 632 Adams Street, Suite 710, Bowling Green,
Kentucky, 42101. The Company is engaged in the oil and gas business; primarily
in Texas, Kentucky, New Mexico and West Virginia. The Company sponsors oil and
gas drilling partnerships through which it raises money for the drilling of oil
and gas wells and participates for a 1% partnership interest as the managing
general partner of the oil and gas exploration partnerships. The Company also
owns two drilling rigs. These rigs are used to drill oil and gas wells for the
sponsored oil and gas drilling partnerships and also other non-affiliated oil
and gas companies. The rigs are operated on behalf of the Company by an
affiliate, Blue Ridge Group, Inc. The Company also acquires direct working
interest participation in oil and gas properties. The participation includes
both operated and non-operated working interest in exploratory and development
wells. These acquisitions are funded by a combination of the profits earned from
sponsoring oil and gas drilling programs, the profit earned from contract
drilling services, revenues from oil and gas sales and from the proceeds of
private offerings of preferred stock. The Company intends to maintain an active
role in the oil and gas industry as an operator of oil and gas wells, a sponsor
of oil and gas drilling programs, a participant in oil and gas programs, and as
an independent producer of oil and gas.

         PRINCIPLES OF CONSOLIDATION

         The accompanying financial statements include the accounts of Blue
Ridge Energy, Inc. and its investment in limited partnerships for which it acts
as managing general partner. As such, the company has the sole and exclusive
right and power to manage and control the partnership. The Company accounts for
its investment in limited partnerships under the proportionate consolidation
method. Under this method, the Company's financial statements include its
pro-rata share of assets and liabilities and revenues and expenses,
respectively, of the limited partnership in which it participates. All material
inter-company accounts and transactions have been eliminated in consolidation.

         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 amounts 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 periods. Actual results could differ from those estimates.

         OPERATION OF DRILLING RIGS

         The Company follows the percentage of completion method of accounting
for its drilling operations. This accounting method allows for the periodic
recognition of income as it is earned. Under this method, income under drilling
contracts, expenses under drilling contracts, all direct costs, and appropriate
portions of indirect costs related to contracts in progress are recognized as
revenues and expenses based upon estimates of the percentage of work completed
at the end of each reporting period.

         WORKING INTERESTS

         Oil and gas revenue from working interests the Company owns are
recognized at the point of sale.

         MANAGED LIMITED PARTNERSHIPS

         The Company sponsors limited partnerships for which it serves as the
Managing General Partner. The purpose of these partnerships is to acquire and
develop oil and gas leases. The partnerships enter into turnkey drilling
contracts with the Company to drill, complete and equip, if warranted, the oil
and gas wells of the partnerships. The Company receives direct compensation,
reimbursement of costs and expenses, and revenues related to turnkey drilling
contracts. The Company normally participates for 1% of the Limited Partnerships
as the Managing General Partner. The Company follows the





                                       6
<PAGE>   8


                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000

industry practice of pro rata consolidation of its investments in these
partnerships. Accordingly, the Company records on its financial statements its
pro rata share of the assets, liabilities, revenues and expenses of each
partnership.

         PROPERTY AND EQUIPMENT

         Property and equipment (other than oil and gas) are stated at cost.
Depreciation is recognized on the straight line method, after considering
salvage value, over the estimated useful lives of the assets as follows:

                                                             LIVES (YEARS)
                                                             -------------

          Machinery and Equipment............................     10

         The Company follows the successful efforts method of accounting for oil
and gas producing activities. Under the successful efforts method of accounting,
costs which relate directly to the discovery of oil and gas reserves are
capitalized. These capitalized costs include;

          (1)    the costs of acquiring mineral interest in properties,

          (2)    costs to drill and equip exploratory wells that find proved
                 reserves,

          (3)    costs to drill and equip development wells and

          (4)    costs for support equipment and facilities used in oil and gas
                 producing activities.

         These costs are depreciated, depleted or amortized on the unit of
productions method, based on estimates of recoverable proved developed oil and
gas reserves. Costs to drill exploratory wells that do not find proved reserves,
geological and geophysical costs, and costs of carrying and retaining unproved
properties are expensed.

         The costs of acquiring unproved properties are capitalized as incurred
and carried until the property is reclassified as a producing oil and gas
property, or considered impaired. The Company annually assesses its unimproved
properties to determine whether they have been impaired. If the results of this
assessment indicate impairment, a loss is recognized by providing a valuation
allowance. When an unproved property is surrendered, the costs related thereto
are charged to the application valuation allowance, if adequate, or charged as a
loss to current operations.

         The costs of drilling exploration wells are capitalized as wells in
progress pending determination of whether the well has found proved reserves.
Once a determination is made, the capitalized costs are either charged to
expense or reclassified as part of the costs of the Company's wells and related
equipment. In the absence of a determination as to whether the reserves that
have been found can be classified as proved, the costs of drilling such an
exploratory well are not carried as an asset for more than one year following
completion of drilling. If after a year has passed, the Company is unable to
determine that proved reserves have been found, the well is assumed to be
impaired, and its costs are charged to expense.

         SURRENDER OR ABANDONMENT OF DEVELOPED PROPERTIES

         Normally, no gain or loss is recognized if only an individual well or
individual item of equipment is abandoned or retired or if only a single lease
or other part of a group of proved properties constituting the amortization base
is abandoned or retired as long as the remainder of the property or group of
properties continues to produce oil or gas. The asset being abandoned or retired
is deemed to be fully amortized, and its cost is charged to accumulated
depreciation, depletion, or amortization. When the last well on an individual
property or group of properties with common geological structures ceases to
produce and the entire property or property group is abandoned, gain or loss is
recognized.




                                       7
<PAGE>   9
                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000


         OTHER DISPOSITIONS

         Upon disposition or retirement of property and equipment other than oil
and gas properties, the cost and related accumulated depreciation are removed
from the accounts and the gain or loss thereon, if any, is credited or charged
to income. The Company recognizes the gain or loss on the sale of either a part
of a proved oil and gas property or of an entire proved oil and gas property
constituting a part of a field upon the sale or other disposition of such. The
unamortized cost of the property or group of properties, a part of which was
sold or otherwise disposed of, is apportioned to the interest sold and interest
retained on the basis of the fair value of those interests.

         IMPAIRMENT OF LONG-LIVED ASSETS

         The Company follows the provisions of SFAS 121-"Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Consequently, the Company reviews its long-lived assets to be held and used,
including oil and gas properties accounted for under the successful efforts
method of accounting. Whenever events or circumstances indicate the carrying
value of those assets may not be recoverable, an impairment loss for proved
properties and capitalized exploration and development costs is recognized. The
Company assesses impairment of capitalized costs of proved oil and gas
properties by comparing net capitalized costs to undiscounted future net cash
flows on a field-by-field basis using expected prices. If an impairment is
indicated based on undiscounted expected future cash flows, then an impairment
is recognizable to the extent that net capitalized costs exceed the estimated
fair value of the property.

         EARNINGS PER COMMON SHARE

         The Company's basic earnings per common share ("Basic EPS") is based on
the weighted average number of common shares outstanding during the respective
periods. The income available to common shareholders is computed after deducting
dividends on the preferred stock. The convertible preferred stock and
outstanding stock warrants are considered anti-dilutive and therefore, excluded
from the earnings per share calculations. The following is a reconciliation of
the numerators and denominators used in the calculation of Basic EPS for the
three months ended March 31, 2001 and 2000:

<TABLE>
<CAPTION>

    BASIC EPS COMPUTATION                                                                                  2001
                                                                                                           ----
<S>                                                                           <C>           <C>      <C>
    Net Income (Loss)...........................................................................     $     (147,383)
    Less: Preferred Stock Dividends.............................................................            (64,500)
                                                                                                     --------------
    Loss Available to Common Stockholders.......................................................     $     (211,883)
                                                                                                     ==============

    DATES                                                                       SHARES         FRACTION       WEIGHTED
    OUTSTANDING                                                               OUTSTANDING      OF PERIOD   AVERAGE SHARES
    -----------                                                               -----------      ---------   --------------
    January 1-March  31...................................................        6,084,494     100.0%        6,084,494
    Conversion of Preferred Stock.........................................              750      50.0%              375
                                                                                  ---------                   ---------
                                                                                  6,085,244

    Weighted Average Shares...............................................                                    6,084,869
                                                                                                              =========
    Basic EPS (Loss)......................................................                                    $   (0.03)
                                                                                                              =========
</TABLE>



                                       8
<PAGE>   10

                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>

  BASIC EPS COMPUTATION-                                                                                        2000
  ----------------------                                                                                        ----
<S>                                                                                                    <C>
    Net Income (Loss)...............................................................................    $        99,481
    Less: Preferred Stock Dividends.................................................................           (155,450)
                                                                                                        ---------------
    Loss Available to Common Stockholders...........................................................    $       (55,969)
                                                                                                        ===============

    DATES                                                                       SHARES         FRACTION       WEIGHTED
    OUTSTANDING                                                               OUTSTANDING      OF PERIOD   AVERAGE SHARES
    -----------                                                               -----------      ---------   --------------

    January 1-March 31....................................................        5,809,794      100.0%       5,809,794
                                                                               ------------
                                                                                  5,809,794
                                                                               ============
    Weighted Average Shares...............................................                                    5,809,794
                                                                                                        ---------------
    Basic EPS (Loss)......................................................                              $         (0.01)
                                                                                                        ---------------
</TABLE>

    SUPPLEMENTAL EARNINGS PER SHARE DATA

         The following supplemental information presents the Company's pro forma
earnings per share assuming that all preferred stock was converted to common
stock as of March 31, 2001 and 2000.

<TABLE>
<CAPTION>

                                                                                            MARCH 31,         MARCH 31,
                                                                                              2001              2000
                                                                                              ----              ----

<S>                                                                                     <C>               <C>
    Net Income (Loss)...............................................................    $     (147,383)   $       99,481
    Preferred stock dividends paid .................................................           (64,500)         (155,450)
    Pro forma preferred stock dividends avoided ....................................            64,500           155,450
                                                                                        --------------    --------------
    Pro forma Net Income available for common stockholders..........................    $     (147,383)   $       99,481
                                                                                        ==============    ==============
    Weighted average shares outstanding ............................................         6,084,494         5,809,794
    Pro forma conversion of all preferred stock as of the
     beginning of year..............................................................           430,000           636,950
                                                                                        --------------    --------------
    Pro forma weighted average shares outstanding
     assuming conversions of all preferred stock ...................................         6,514,494         6,446,744
                                                                                        ==============    ==============
    Pro forma earnings (loss) per common share .....................................    $        (0.02)   $         0.02
                                                                                        ==============    ==============
</TABLE>

          The preceding pro forma EPS disclosure is presented to enable the user
 of the financial statements to determine the effect of the conversion of
 preferred shares outstanding into potential common shares. Each share of the
 Series D Preferred Stock converts automatically into common stock two years
 from issuance or effective when a Securities Act Registration Statement for the
 common stock is filed with the SEC, whichever occurs first.

          In addition to the potential common shares from the conversion of
 existing preferred shares, there exists various warrants for the purchase of
 common stock. Reference is made to footnote #9 in the financial statements
 included in Amendment #1 to Form 10-KSB for the period ending December 31, 2000
 for a full description of these warrants. A summary of these warrants is as
 follows:

<TABLE>
<CAPTION>

                                             Potential Shares
             Holder                           of Common Stock                      Exercise Price
             ------                           ---------------                      --------------

<S>                                                <C>                                  <C>
          BR Group                                 4,000,000                            $ 0.05
          Other Holders                            3,865,731                            $ 1.00 to $ 6.00
                                            ----------------

          Potential Additional Shares              7,865,731
                                            ----------------
</TABLE>



                                       9
<PAGE>   11

                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000

         INCOME TAXES

         Income taxes are provided based on earnings reported for financial
statement purposes. The provision for income taxes differ from the amounts
currently payable because of temporary differences (primarily intangible
drilling costs and the net operating loss carryforward) in the recognition of
certain income and expense items for financial reporting and tax reporting
purposes.

         CASH AND CASH EQUIVALENTS

         For purposes of reporting cash flows, cash and cash equivalents
includes cash on hand and cash on deposit. The Company defines cash equivalents
as short-term and highly liquid investments that are both readily convertible to
known amounts of cash and have an original maturity of less than 90 days.

         2.  AFFILIATED OIL AND GAS PARTNERSHIPS

         The Company provides turnkey drilling services for the various oil and
gas partnerships which it sponsors. Fees earned for these drilling services,
including the sale of leases to the partnerships, amounted to $468,000 and
$860,612 during the three months ended March 31, 2001 and 2000, respectively.
During 2000 the Company received management fees from some of the partnerships
for its services in connection with the selection of the joint venture prospects
and the initial operations of the joint venture. Management fees earned during
the three months ended March 31, 2001 and 2000 amounted to $-0- and $41,695,
respectively.

         Included in the Company's financial statements are contributions made
to the various Company sponsored oil and gas partnerships, less the applicable
loss generated by these partnerships relative to the Company's percentage
ownership. The Company has allocated, on a pro-rata basis the amounts associated
with these investments to the appropriate asset, liability, income and expense
accounts.

         3.  RELATED PARTY TRANSACTIONS

         STOCK TRANSACTIONS

         As of March 31, 2001, there are 6,085,244 shares of common stock issued
and outstanding. A total of 3,126,893 shares are held by Blue Ridge Group, Inc
(BRG) and the remainder of 2,958,351 shares are held by approximately 600
shareholders, 40 of which are original stockholders of the Company.

         ADVANCES TO/FROM RELATED PARTIES

         Blue Ridge Group, Inc. provides various management, administrative,
accounting and geological services for the Company at a rate of $20,000 per
month. Blue Ridge Energy also reimburses Blue Ridge Group for direct costs paid
on its behalf and the costs of various drilling services. As of March 31, 2001
and 2000, approximately $111,737 and $11,868 had been advanced to Blue Ridge
Group under these arrangements.

         Blue Ridge Energy receives advances from its sponsored limited
partnerships for turnkey drilling and completion services prior to completing
such activities. These amounts are recorded as drilling advances and reflected
as current liabilities until such drilling and completion activities have been
completed and such amounts have been earned as income. As of March 31, 2001 and
December 31, 2000, drilling advances received related to future obligations to
be completed were $450,000 and $918,000, respectively.




                                       10
<PAGE>   12

                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000


         4.  PROPERTY AND EQUIPMENT

         Property and equipment, stated at cost, consisted of the following at
March 31, 2001 and December 31, 2000:

<TABLE>
<CAPTION>
                                                               March 31,                       December 31,
                                                                  2001                             2000
                                                              -----------                      ------------

<S>                                                           <C>                              <C>
          Oil and Gas Properties                              $ 1,931,254                      $ 1,871,402
          Drilling Rigs and Equipment                           2,212,861                        2,212,861
                                                              -----------                      -----------
                                                                4,144,115                        4,084,263
          Less Accumulated Depreciation                           349,683                          313,683
                                                              -----------                      -----------
                                                              $ 3,794,432                      $ 3,770,580
                                                              ===========                      ===========
</TABLE>

         Depletion, Depreciation and Amortization expense was $36,000 and
$36,000 for the three months ended March 31, 2001 and 2000, respectively.

         5.  COMMITMENTS AND CONTINGENCIES

         COMMITMENTS

         The Company has agreed to automatically convert all shares of preferred
stock outstanding effective when a Securities Act Registration Statement is
filed with the SEC or two years from issuance, whichever comes first.

         The Company has commitments, during 2001, of approximately $220,000 in
future capital costs related to six (6) existing wells in Harlan County,
Kentucky and the development of their reserves.

         CONTINGENCIES

         The Company's drilling and oil and gas exploration and production
operations are subject to inherent risks, including blowouts, fire and
explosions which could result in personal injury or death, suspended drilling
operations, damage to or destruction of equipment, damage to producing
formations and pollution or other environmental hazards. As a protection against
these hazards, the Company maintains general liability insurance coverage of
approximately $10 million per occurrence and in the aggregate. The Company
believes it is adequately insured for public liability and property damage to
others with respect to its operations. However, such insurance may not be
sufficient to protect the Company against liability for all consequences of well
disasters, extensive fire damage, or damage to the environment. The Company has
never been fined or incurred liability for pollution or other environmental
damage in connection with its operations.

         6.  STOCKHOLDERS' EQUITY

         The Company is authorized to issue two classes of stock that are
designated, respectively, common and preferred stock. As of March 31, 2001, the
Company was authorized to issue 25,000,000 shares of stock, 20,000,000 being
designated as common stock and 5,000,000 shares designated as preferred stock.

         SERIES D PREFERRED STOCK

         During 1998, the Company authorized the issuance and sale of 1,000,000
shares of Series D Preferred Stock ("Series D Stock") which has a par value of
$0.001 per share at $5.00 per share. The Series D Stock bears a 12% per annum
dividend payable monthly. Each share of the Series D Stock shall be converted
automatically into one (1) share of Common Stock effective when a Securities Act
Registration Statement for the Common Stock is filed with the SEC or two years
from issuance, whichever occurs first.

         In the event of any liquidation, dissolution or winding up of the
Company, either voluntary or involuntary, the existing holders of Series D Stock
shall be entitled to receive, prior and in preference to any distribution of any
assets or surplus funds of the Company to the holders of Common Stock the amount
of $5.00 per share plus all unpaid dividends on such share of each share of
Series D Stock then held by the shareholder.




                                       11
<PAGE>   13

                             BLUE RIDGE ENERGY, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2001 AND 2000


         At March 31, 2001 and December 31, 2000, there were 429,250 and 430,000
shares of Series D Stock issued and outstanding, respectively. The total amount
received from the sale of this stock was $3,523,500, less expenses paid of
$930,250.

         COMMON STOCK WARRANTS

         As of March 31, 2001, the Company had warrants outstanding to purchase
7,865,731 shares of Common Stock at prices ranging from $0.05 to $6.00 per
share. These warrants expire from October 31, 2002 until March 27, 2005. See the
Company's 10-KSB for December 31, 2000 for additional details.




                                       12
<PAGE>   14

                   REPORT OF REVIEW BY INDEPENDENT ACCOUNTANTS
                   -------------------------------------------

To the Stockholders and Directors of Blue Ridge Energy, Inc.



         We have reviewed the accompanying condensed balance sheet of Blue Ridge
Energy, Inc., as of March 31, 2001, and the related condensed statements of
income for each of the three month periods ended March 31, 2001 and 2000 and the
condensed statements of cash flows for the three month periods ended March 31,
2001 and 2000. Such condensed financial statements and related disclosures have
been prepared in accordance with the required format and disclosures prescribed
by the SEC for Form 10-QSB. These financial statements are the responsibility of
the Company's management.

         We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based upon our review, we are not aware of any material modifications that
should be made to the accompanying condensed interim financial statements for
them to be in conformity with generally accepted accounting principles.

We previously audited in accordance with generally accepted auditing standards,
the balance sheet as of December 31, 2000, and the related statements of income,
of stockholders' equity, and of cash flows for the year then ended (not
presented herein), and in our report dated March 28, 2001, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of December
31, 2000, is fairly stated in all material respects, in relation to the balance
sheet from which it has been derived.





Looney, Samson & Associates, P.L.L.C.
Dallas, Texas
May 4, 2001



                                       13
<PAGE>   15


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

FINANCIAL OVERVIEW:

         Blue Ridge Energy, Inc. ("BR Energy"), a Nevada corporation, was
organized in November, 1994, as Gem Source, Incorporated ("Gem Source"), and
subsequently changed the name of the company to Blue Ridge Energy, Inc. in May
1996. BR Energy has offices at 632 Adams Street, Suite 710, Bowling Green, KY
42101.

         BR Energy is engaged in the oil and gas business primarily in Texas,
Kentucky, New Mexico and West Virginia. BR Energy sponsors oil & gas drilling
partnerships through which it raises funds for the drilling of oil and gas wells
and normally participates for a 1% partnership interest as the managing general
partner of the partnerships. BR Energy also owns two drilling rigs. These rigs
are used to drill oil and gas wells for the sponsored oil and gas drilling
partnerships and also other non-affiliated oil and gas companies. The rigs are
managed and operated on behalf of BR Energy by an affiliate, Blue Ridge Group,
Inc.

         BR Energy also acquires direct working interest participation in oil
and gas properties. The working interest participation includes exploratory and
development wells and both operated and non-operated working interest
participation. BR Energy intends to maintain an active role in the oil and gas
industry as an operator of oil and gas wells, a sponsor of oil and gas drilling
programs, a participant in oil and gas programs and as an independent producer
of oil and gas.

         By March 31, 2001, BR Energy had total assets of $4.3 million, total
liabilities of $1.1 million and shareholders' equity of $3.2 million. BR
Energy's net income decreased to a loss of $(147,000) during the first three
months of 2001 as compared to net income of $100,000 for the same period in
2000. Earnings per common share, which take into account cash dividends paid on
preferred stock decreased to $(0.03) per share during the first three months of
2001 as compared to $(0.01) during the same period in 2000. All per share data
in this report has been adjusted to give effect to applicable stock issues and
conversions.

         The following table summarizes by geographic area BR Energy's developed
and undeveloped acreage as of March 31, 2001

<TABLE>
<CAPTION>

DEVELOPED AND UNDEVELOPED ACREAGE
GEOGRAPHIC AREA                                              DEVELOPED ACREAGE                   UNDEVELOPED ACREAGE
-------------------------------------------------------------------------------------------------------------------------------
                                                        GROSS ACRES        NET ACRES         GROSS ACRES        NET ACRES
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>              <C>                <C>               <C>
 New Mexico.......................................             80.00            53.60              0.00              0.00
 Texas   .........................................            863.78            33.03            332.00            133.00
 Kentucky.........................................            700.00            99.40         40,587.00         23,143.00
 West Virginia....................................            120.00             8.24          2,520.00          2,142.00
                                                      --------------    -------------     -------------    --------------
     Totals.......................................           1763.78           194.27         43,439.00         25,418.00
                                                      ==============    =============     =============    ==============
</TABLE>

         As of March 31, 2001, BR Energy has participated, either directly or
indirectly through its sponsored limited partnerships, in 60 wells, of which 39
are presently productive and 5 wells are in the completion process. These wells
are located in Kentucky, Texas, West Virginia and New Mexico.

         The following table summarizes by geographic area BR Energy's gross and
net interests in productive oil and gas wells and its oil and gas reserve
information as of December 31, 2000 which is the latest date the Company has
independent petroleum engineers' evaluations related to its reserves. Productive
wells are producing wells and wells capable of production, including gas wells
awaiting pipeline connections and oil wells awaiting connection to production
facilities. Wells that are completed in more than one producing horizon are
counted as one well.

<TABLE>
<CAPTION>

                                          GROSS WELLS                    NET WELLS                     RESERVES
 PRODUCTIVE WELLS                         -----------                    ---------                     --------
 GEOGRAPHIC AREA                       OIL           GAS          OIL                GAS          OIL            GAS
 ---------------                       ---           ---          ---                ---          ---            ---

<S>                                    <C>            <C>           <C>             <C>         <C>              <C>
 New Mexico....................          1.00           0.00          0.67            0.00        10,537           13,000
 Texas   ......................          1.00           1.00          0.80            0.01        16,857           31,000
 Kentucky .....................          0.00          30.00          0.00            6.52             0          926,301
 West Virginia.................          0.00           6.00          0.00            1.81             0           68,521
                                  -----------    -----------    ----------    ------------     ---------    -------------
     Totals....................          2.00          37.00          1.47            8.34        27,394        1,038,822
                                  ===========    ===========    ==========    ============     =========    =============
</TABLE>



                                       14
<PAGE>   16

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

         KEY PROPERTIES

         The working interest owned by BR Energy, either directly or indirectly
through the oil and gas partnerships, is owned jointly with other working
interest partners. Management does not believe any of these burdens materially
detract from the value of the properties or will materially detract from the
value of properties or materially interfere with their use.

         The following are the primary properties held by BR Energy as of March
31, 2001:

         DEVELOPED PROPERTIES:

         Boon's Camp Prospect: During the second quarter of 2000, BR Energy
committed to the acquisition of and development of undeveloped and non-producing
oil and gas leases consisting of a 50% Working Interest in 12 wells to be
drilled in the Boon's Camp Prospect in Johnson County, Kentucky. During the
latter half of 2000, BR Energy sold a 45% Working Interest to a limited
partnership sponsored by BR Energy, thereby retaining a 5% Carried Working
Interest. All 12 wells were drilled and completed as productive gas wells during
the latter half of 2000.

         Homestake #1: The Homestake #1 oil well is a development well located
in Lea County, New Mexico. BR Energy owns 66.9% of the Working Interest in the
Homestake #1 which is a 50.2% Net Revenue Interest.

         Harlan/Big Sandy Prospects: These development wells are located in
Johnson, Bell, Knox and Harlan counties of Kentucky. As of March 31, 2001,
eighteen (18) wells have been drilled on these prospects. Of the eighteen (18),
ten (10) are currently in production and selling gas on a curtailed basis, (5)
are drilled and scheduled for completion in 2001, two (2) are shut in and one
(1) was a dry hole. These wells account for 67% of the total value of BR
Energy's reserves as of December 31,2000, with no single well being a majority
of the reserve value attributed thereto. BR Energy owns varying Working
Interests in these wells ranging from 25% to 30.25% of the Working Interest with
Net Revenue Interests ranging from 18.75% to 22.69% in each well. The Company
anticipates connecting to the East Tennessee Natural Gas Interstate Pipeline by
the 4th quarter of 2001, thereby allowing these wells to produce at full
capacity rather than on a curtailed basis.

         Keegan Gibson #1: The Keegan Gibson #1 oil well is a development well
located in Smith County, Texas. In December of 1999, BR Energy increased its
ownership in this well to 74% of the Working Interest which is a 63% Net Revenue
Interest.

         Shelby County, Texas: At the end of 1999, BR Energy acquired an
interest in one (1) development well in Shelby County, Texas, which was drilled,
completed and began production during the third quarter of 2000.

         Mingo and Wyoming Counties, West Virginia: At the end of 1999, BR
Energy acquired an interest in six (6) development wells in Mingo and Wyoming
Counties, West Virginia. Drilling activities for these wells began in December,
1999. During the first quarter of 2000, BR Energy acquired an interest in a
sixth well and commenced drilling activities on all of the six wells. All of the
wells have been drilled, completed and were producing gas as of March 31, 2001.

         UNDEVELOPED PROPERTIES

         West Pebble Island Prospect: During the second quarter of 2000, BR
Energy committed to the acquisition and development of undeveloped and
non-producing oil and gas leases consisting of a 40% Working Interest in 2 wells
to be drilled in the West Pebble Island Prospect in Tyler County, Texas. During
the fourth quarter of 2000, BR Energy sold these Working Interests to limited
partnerships sponsored by BR Energy, thereby retaining varying Carried Working
Interests. Drilling in this prospect began during the first quarter of 2001.

         Contrary Creek Prospect: During the second quarter of 2000, BR Energy
committed to the acquisition and development of undeveloped and non-producing
oil and gas leases consisting of a 50% Working Interest in 11 wells to be
drilled in the Contrary Creek Prospect in Lawrence County, Kentucky. During the
fourth quarter of 2000, BR Energy sold these Working Interests to limited
partnerships sponsored by BR Energy, thereby retaining varying Carried Working
Interests. Four wells have been drilled, determined to be commercially
productive and are in varying stages of completion as of March 31, 2001.

         McDonald Prospect: During the second quarter of 2000, BR Energy
committed to the acquisition and development of undeveloped and non-producing
oil and gas leases consisting of a 50% Working Interest in 5 wells to be drilled
in the McDonald Prospect in Logan County, West Virginia. During the fourth
quarter of 2000, BR Energy sold these Working




                                       15
<PAGE>   17

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

Interests to limited partnerships sponsored by BR Energy, thereby retaining
varying Carried Working Interests. One well has been drilled, determined to be
commercially productive and is being completed as of March 31, 2001.

         Licking River Prospect: During the fourth quarter of 2000, BR Energy
committed to the acquisition and development of undeveloped and non-producing
oil and gas leases consisting of a 50% Working Interest in approximately 18,000
acres in the Licking River Prospect in Morgan County, Kentucky. Drilling in this
prospect is scheduled to begin during 2001.

         DRILLING RIGS

         During 1999, the Company acquired two drilling rigs and ancillary
equipment. Rig #4 is a 1999 Ingersoll Rand RD-20 which is capable of drilling to
5,000 feet and Rig #2 which is an Ingersoll Rand TR-4 acquired from BR Group
which is capable of drilling to 3,000 feet. The drilling rigs are managed by BR
Group on behalf of BR Energy and are used to drill wells for oil and gas
partnerships sponsored by BR Energy as well as on a contract basis for other
third parties. During the first quarter of 2001, Rig #2 drilled 8 wells and Rig
#4 drilled 3 wells.

         INCOME STATEMENT REVIEW:

         THREE MONTHS ENDED MARCH 31, 2001 AND 2000:

         BR Energy's net income decreased to a loss of $(147,000) during the
first quarter of 2001 as compared to net income of $100,000 for the same period
in 2000, Earnings per common share, which takes into account cash dividends paid
on preferred stock decreased to $(0.03) per share during the first quarter of
2001 as compared to $(0.01) during the same period in 2000.

         Operating Revenues:
         ------------------

         Operating revenues totaled $863,000 during the three months ended March
31, 2001 as compared to the $1,274,000 recorded during the three months ended
March 31, 2000, This decrease was primarily related to a decreased activity
level in BR Energy's sponsorship of Limited Partnerships for the drilling and
development of oil and gas properties during 2001.

         Direct Operating Costs:
         ----------------------

         Direct operating costs totaled $707,000 during the three months ended
March 31, 2001, as compared to the $1,009,000 experienced during the same period
in 2000. The changes in direct operating costs are directly and proportionally
related to the changes in operating revenues previously discussed.

         Other Operating Expenses:
         ------------------------

         Marketing expenses increased 310.0% to $86,000 during the first quarter
of 2001 from the $21,000 experienced during this period in 2000 due to changes
in marketing strategy for sponsoring Limited Partnerships as previously
discussed. General and Administrative expenses increased 226% to $281,000 during
the first quarter of 2001 as compared to $86,000 during the same period in 2000,
primarily as a result of legal and accounting fees related to SEC reporting
requirements and registration statements.

         Other Income (Expense):
         ----------------------

         Other Income (Expense) remained essentially the same during the first
quarter of 2001 as compared to the first quarter of 2000.



                                       16
<PAGE>   18

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

         BALANCE SHEET REVIEW:
         ---------------------

         ASSETS:
         -------

         BR Energy's current assets decrease of 59% to $556,000 at March 31,
2001 as compared to $1,353,000 at December 31, 2000 was primarily due to the use
of cash and advances in fulfillment of drilling commitments that existed at
December 31, 2000. Property and equipment at March 31, 2001 remained essentially
the same as at December 31, 2000.

         LIABILITIES:
         ------------

         BR Energy's current liabilities decreased 37% to $790,000 at March 31,
2001 from $1,248,000 at December 31, 2000 due to decreases in drilling advances
received for work in progress.

         Effective January 1, 1996, BR Energy adopted provisions of the
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" which requires the use of the "liability method" under which deferred tax
assets and liabilities are recognized for their estimated future tax
consequences. At March 31, 2001 and December 31, 2000 BR Energy had recognized
deferred income tax liabilities of $76,000 and $152,000, respectively as a
result of this methodology.

         STOCKHOLDERS' EQUITY:
         ---------------------

         Total capital invested in BR Energy for Common and Preferred Stock
decreased 6% to $3.2 million at March 31, 2001 from $3.4 million at December 31,
2000, primarily as a result of the loss for the quarter and the payment of
dividends on Preferred Stock.

         CAPITAL RESOURCES AND LIQUIDITY:
         --------------------------------

         As a result of BR Energy's equity transactions and net loss from
operations, the current ratio at March 31, 2001 was 0.70 to 1, a decrease of 35%
from 1.08 to 1 at December 31, 2000.

         During the two periods ended March 31, 2001 and December 31, 2000 BR
Energy has relied upon net inflows of cash from equity and debt transactions,
supplemented by net inflows of cash generated by its operating activities to
fund the purchase of assets and its expansion. Generally speaking, management
expects to finance further growth with similar equity transactions and improved
cash flow from operations. It is also possible that further expansion will be
aided through the use of long-term debt transactions, both secured and
unsecured.

                                     PART II
                                OTHER INFORMATION
                                -----------------

 ITEM 1.  LEGAL PROCEEDINGS
           There are no legal proceedings pending against BR Energy, Inc.

 ITEM 2.  CHANGES IN SECURITIES
           None

 ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
            Not Applicable

 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
            No reports on Form 8-K were filed during the quarter ended March 31,
            2001.



                                       17
<PAGE>   19


                                   SIGNATURE
                                   ---------

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

                                               BLUE RIDGE ENERGY, INC.



 Date May 8, 2001                            By /s/ James T. Cook, Jr.
                                                James T. Cook, Jr.
                                                Sr. Vice President-Finance & CFO




                                       18